In April this year, one in five employers said that they were likely to make redundancies in the next year (YouGov). That was before the economic turmoil and energy price hikes that we have all faced this autumn. Meta and Twitter have recently announced large-scale world-wide redundancy programmes and P&O Ferries made over 800 redundancies earlier this year. Whilst it is something none of us wish to consider, it seems likely that many businesses, large and small, will need to consider the size of their workforce in the coming months and may need to make redundancies.
The law around redundancy is far from straightforward. I have set out below some common traps, but please do get in touch if you’d like the employment team to help you prepare your redundancy programme.
Is redundancy the real reason?
Many employers have not addressed misconduct and poor performance issues over the last few years, often because of covid restrictions. It may seem appealing to make such employees ‘redundant’ now rather than following what can often be lengthy misconduct or poor performance procedures. Using redundancy to cloak the real reason for dismissal is however fraught with difficulties. Tribunals will not rely on a label given for a dismissal and will seek to find the real reason an employee was dismissed. Such a move would leave an employer open to potential unfair dismissal and discrimination claims.
Have you considered how to avoid redundancies?
Before starting a redundancy procedure, you should consider whether any alternatives exist, such as a recruitment freeze, reducing overtime, a pay freeze or offering early retirement. Even if these options are not available, it is good practice to consider alternatives, let employees know that you have done so and keep a record of this step.
Have you factored in enough time to consult with the employees?
By the time you have decided to make redundancies, you generally will want to do so without delay. However, there are minimum time periods for consulting with your employees if you intend to make a larger number of redundancy dismissals. Where an employer proposes to dismiss 20 employees or more within a 90-day period, they are required to consult with employee representatives. The consultation must be for a minimum of 30 days if fewer than 100 redundancies are proposed and 45 days if 100 or more redundancies are proposed.
Failure to do so can lead to claims for a protective award of up to 90 days’ pay for each employee, one of the most expensive liabilities that an employer may face. There is also potential criminal liability if an employer fails to notify BEIS of the proposed redundancies.
Whatever number of redundancies you plan to make, you will also need to consult with each employee individually. There is no set time period for individual consultation but doing it properly will help protect you in any unfair dismissal claims.
What selection criteria can you rely on?
Before selecting an employee for redundancy, an employer must consider what the appropriate pool of employees for redundancy selection should be. If they fail to do so, the resulting dismissals are likely to be unfair. Having decided on the pool, an employer then needs to determine selection criteria. These should be objective and capable of independent verification. Examples of appropriate selection criteria include performance and ability, length of service, attendance records and disciplinary records. In contrast, selection based on an employee’s ‘attitude’ or a manager’s opinion of them have been found to be unfair.
Suitable alternative jobs and those on maternity, adoption and shared parental leave
As part of the redundancy process, you will need to consider whether there are any suitable alternative jobs available. This is one area that the law allows you to positively discriminate in favour of certain employees. If suitable alternative employment is available, it must be offered to any employee on maternity leave, adoption leave or shared parental leave before being offered to any other employees.
These are just a few of the issues that crop up in redundancy cases. Please do speak to one of the employment team before embarking on a redundancy programme. We can help you through the process, plan a timetable, draft letters and ensure that any selection pools and criteria are fair.
If you have any further questions, please contact Petra Venton on email@example.com or email an enquiry to firstname.lastname@example.org or call 01622 698000.