How do I carry out individual or collective redundancies?

The coronavirus pandemic has changed the world that we live and work in and unfortunately, in spite of the level of support from the Government, it is inevitable that some businesses will be required to consider making redundancies.  Our Employment Law team here review the process that employers need to follow to ensure fair and consistent treatment of their workforce and to reduce the risk of tribunal claims being brought against them in the future.

If there is a “reduced requirement for employees to carry out work of a particular kind” or some form of business closure or re-organisation then the redundancy definition is likely to be satisfied.

Employees who have two years’ continuous employment and are made redundant will be entitled to a statutory redundancy payment calculated in the same way as the basic award for unfair dismissal.

As an employer, you should ensure that you can prove your steps when concluding that:

1. the employee is redundant, and
2. you have acted reasonably in treating the redundancy as grounds for dismissal taking into account issues such as consultation and selection procedures.

You should be aware of accusations of discrimination, particularly on the grounds of sex, race or disability.

Initial steps when considering redundancy

You should consider the following points before you start any discussion with an affected employee:

• Check the reason for the proposed redundancies.  Is it a long term or short-term issue?
• Are there ways you can avoid redundancies?  For example:

1. Restrictions on recruitment
2. Voluntary early retirement/severance
3. Re-training or transferring staff to other work
4. Short time working/job share schemes
5. Reduction in overtime
6. Wage cuts or wage freezes

• Whether you have a redundancy policy or have operated some customary arrangement in the past which could amount to a policy?  If so, you should consider how it applies to the particular circumstances. 
• Identify the minimum number of staff proposed to be made redundant.  If 20 or more within a period of 90 days or less then see mass redundancies below.  If less than 20 then see individual or fewer than 20 redundancies below.
• If a number of employees, are involved identify the ‘pool of labour’ from which the redundant employees are to be selected.
• Consider the fair selection criteria options and the order of importance they have.
• Check whether there is a recognised Trade Union or if not, a Staff Association, which can elect or act as employee representatives.

Less than 20 redundancies in 90 days

If you are considering making fewer than 20 employees redundant then it will be necessary to follow a fair procedure in relation to each employee at risk of redundancy.

Where there are no alternatives to redundancy you should identify the ‘pool of labour’ from which the redundant employees are to be selected and notify them that they are ‘at risk’ of being made redundant.  This should be in writing; an at risk letter is normally given to employees through a mass meeting or individual face to face meetings.

You should notify the employees that they will be invited to enter into consultation with the company as to the possibility of avoiding redundancies and the method of selecting employees for redundancy.  Employees should be notified of the date and time of the consultation meeting and invited to confirm their availability and whether they need more time to consider their position.  At this stage, you should ask them to consider whether they would like to volunteer for redundancy.

It’s important to remember that consultation is not simply about telling the employee that they are about to be made redundant, but is also a useful information gathering exercise which will assist you in making your decision.

20 or more redundancies in 90 days

If 20 or more redundancies are being “proposed” at “one establishment” in a 90-day period then collective consultation obligations will arise, under s. 188(1) of TULR(C)A (Trade Union and Labour Relations Consolidation Act 1992).

You are required to inform the Secretary of State of the proposed redundancies, which must be received by the Secretary of State at least 45 days before the first dismissal, where you propose to dismiss 100 or more employees within a 90-day period. Where less than 100 redundancies are proposed, the notification period is 30 days.

You should give your employees the opportunity to elect representatives if they are not of a description in respect of which a Trade Union is recognised.

You should also disclose the following information to the appropriate representatives in writing:

• The reasons for the proposals
• The numbers and descriptions of the employees proposed to be dismissed
• The total number of employees of that description employed at the establishment in question
• The proposed method of selection
• The proposed method of carrying out the dismissal including the period over which the dismissals are to take effect
• The proposed method for calculating the amount of any redundancy payments to be made.

The consultations with the appropriate representatives should be held in good time and in any event for dismissals of between 20 and 99 employees at least 30 days before the first dismissal and for dismissal of 100 or more at least 90 days before the proposed date for the first dismissal.

Consultation should include consideration of avoiding the dismissals, reducing the number of dismissals and mitigating the consequences of the dismissals and must be undertaken with a view to reaching agreement with the appropriate representatives.

An Employment Tribunal may award up to 90 days' pay in respect of each employee where there has been a breach of the information and consultation duty (a protective award) by the employer.  An employer may be fined if it fails to notify the Secretary of State and there is no cap on the fine that can be issued to employers.

Whenever there is an obligation to consult collectively, you will also need to ensure that you have followed a fair procedure in relation to individuals, including consulting with them individually, so as to minimise claims for unfair dismissal.

Selecting employees for redundancy

When selecting employees an objective criteria should be used; if the method of selection is inherently unreasonable then the dismissals will be unfair.

The appropriate level of manager should carry out the selection and there should be an independent overseer who can give objectivity to the process of selection.

You should consider whether the policy being applied has a disproportionate impact on one section of the work population.  You should be cautious of dismissing employees on maternity leave or selecting part-timers in the absence of some real and recognisable justification.

After these considerations, you should then use your list of potential employees and apply the criteria using a consistent scoring process. There should be evidence to support the grounds for scores allocated.

A second meeting should then be arranged in order to discuss with the employees their individual selection scores.  You can find out more on employee selection for redundancy in our recent article.

Alternative employment in redundancy situations

You should inform selected employees that the company will consider all available employment opportunities to enable an employee to consider alternative employment. You should then identify any vacancies at whatever level and invite all selected employees to consider applying for such available positions.

Retraining to enable retention should be considered, particularly for longer-term employees.

Dismissal for reason of redundancy

Where there are no alternatives, you should dismiss on notice and make appropriate redundancy payments.  Employees should be informed of their right to appeal against the decisions taken and they are also entitled to reasonable time off work to look for alternative employment during their notice period.

Appeal process for redundancies

You should adopt the same procedure as outlined in their disciplinary procedure so far as notification is concerned.  An independent manager should conduct the appeal and allow the employee sufficient time to have their say and adjourn to consider the decision. 

Above all, you should ensure that at every step there is documentation to confirm to an Employment Tribunal what you have done and that you have acted fairly.

If you are an employer and you are facing the unfortunate position that you considering making redundancies, you can call us today for professional and pragmatic legal advice to help you and your employees through this time of change.  Contact us today on 023 8071 7717 or email employment@warnergoodman.co.uk to discuss your situation.

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ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice. All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.