Can you Find it – Business © 2017 THE FULL STORY…REDUNDANCY – MAKING SURE YOU GET IT RIGHTPublished in Can you find it Business Edition on Thursday, December 1st 2015
THIS article provides a very basic outline of the redundancy process – and provides a few practical tips and pointers. I will not look at the additional procedures you need to follow if you are making 20 or more redundancies – I will deal with that issue in a later article.
Is there or is there likely to be a redundancy situation?
When considering redundancies, the first thing you should do is analyse the particular circumstances to establish whether a redundancy situation actually exists.
If you make someone redundant, or you think you have, but the Tribunal find that it wasn’t in fact a redundancy situation, the dismissal could be unfair.
In addition, even if the Tribunal find that there was a redundancy situation they could go on to find that the real reason for dismissal is something else – eg performance. Again, the dismissal could be unfair.
It is very important, therefore, to establish:
1. Is this a redundancy situation?
2. Will redundancy be accepted as the reason for dismissal?
The next step will be to establish whether there is any form of redundancy policy, and whether it is binding.
If there is and it is – it might tie your hands as regards selection criteria etc.
Redundancy policies are a bad idea r if you don’t have one, don’t introduce one.
Are there any alternatives to Redundancies?
You should then consider whether there might be any alternatives to making redundancies.
While there is no obligation on employers to try to avoid redundancies, you should at least consider whether there are any alternatives.
Common alternatives include:
Reducing or stopping overtime;
Trying to agree reductions in hours or pay.
What about voluntary redundancy?
Do you need to invite volunteers for redundancy? Unless you are bound by a redundancy policy – no.
In principle, inviting volunteers is a bad idea. You tend to get volunteers who you do not want to lose.
You can turn down volunteers – provided your invitation for volunteers is properly worded.
But, if you turn down volunteers in a department and then go on to select other employees in that department, they can argue that the selection process is inherently unfair since you were never going to select the volunteers because you previously rejected their applications for voluntary redundancy.
In addition, it delays the whole process. In redundancy situations delay is dangerous.
The longer the process goes on without everyone knowing who is in the frame and who isn’t, the more scope there is for employees not in the frame to become unsettled and start looking for other jobs.
The next step is to decide the pool of employees from which you will select those employees to be made redundant.
In other words, those employees who work in particular departments or who are doing particular jobs – and from which the redundancies have to be made.
Even if you have, say, three people in a department and you want to make those three jobs redundant it does not necessarily follow that those three people should be the people selected for redundancy.
There might be other employees doing other jobs, in other departments, who should be included in the pool
This might be the case where you have staff whose skills or jobs are interchangeable – in particular where they have covered for each other.
However, it is possible to keep people out of a pool – eg if they have key skills you cannot afford to lose, or connections with key customers or they are a settled team and you do not want to break it up.
Once you have your pool – or pools – organised, you then need to work out what selection criteria you want to use.
Common selection criteria include:
Key skills and experience for the remaining jobs.
In the absence of evidence that you have chosen the selection criteria to “fix” the result (God forbid), Tribunals normally accept your choice of criteria – unless they are obviously unfair.
But, when choosing selection criteria and doing the scoring, be careful.
Two examples are discrimination – ensure your selection criteria do not breach any of the discrimination legislation – eg race, sex, disability, sexual orientation, religion or belief – or age with effect from October 2016. Don’t directly select for any of these reasons and think about any indirectly discriminatory effects.
Special rules apply to women who are pregnant or on maternity leave. Obvious problems are claims for sex discrimination and automatic unfair dismissal.
In addition, and bizarrely, if you make redundant a woman on maternity leave you are obliged to give her first refusal on any available suitable alternative employment.
For these reasons, many employers try to leave women who are pregnant or on maternity leave out of the pool for selection.
Applying the Selection Criteria – Doing the Scoring
The next step is to do the marking.
Carry out a “mock” scoring exercise – if you get the wrong result – think again about your selection criteria.
Consider who should do the marking.
Two key steps:
1. Consult with the affected employees.
2. Look for and, if applicable, offer any suitable available vacancies.
Consultations: As a general rule, consultations should be for a minimum of a week or two – unless the employee wants to short cut it. Do not set down a rigid time frame.
Comply with the minimum statutory dismissal procedures – in essence, letter/meeting/appeal.
Contrary to popular belief there is no need to consult with everyone in the pool, just those selected.
Consultations should start with a brief meeting with the employees provisionally selected to provide them with an initial letter.
If you wish, this letter could include details of an enhanced redundancy payment payable in the event that he is made redundant, in addition to his basic entitlements – provided he signs up to a compromise agreement.
This is a very good way of short cutting the process and avoiding claims. Most employees accept the offer at an early stage, provided it is reasonable.
Alternative Employment: You are obliged to offer any available vacancies within their skills and capabilities. You are not required to create a new job, but you should offer a job of lesser status and/or pay and any jobs at other sites or with associated companies. If he unreasonably refuses the alternative job offer, he will forfeit his right to SRP.
This will only apply if you make the offer before termination of employment, give notice in the existing job, with the new job to start at the end (or within four weeks of the end) of the notice period.
Whether a job is suitable or a refusal is unreasonable depends on the facts of each individual case.
Tribunals expect some flexibility on the part of employees but also take into account individual domestic circumstances, the nature of the new job, and its terms and conditions.
Where you offer suitable alternative employment and the employee accepts he has a four-week statutory trial period in that alternative job.
Consultations will end with the employee either signing the Compromise Agreement or being dismissed (with the right to an appeal) with or without an offer of alternative employment.
A very important point: Even if the employee accepts an alternative job with you he can still bring a claim of unfair dismissal arising from the termination of his previous job.