As the furlough scheme comes to an end, many businesses are facing difficult decisions around redundancy. But how can employers ensure the redundancy process is fair? And how can a solicitor help a business facing the prospect of making redundancies? We discussed this and more during #SolicitorChat.
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Talk us through the steps employers must take during the redundancy process.
The first thing to consider is whether or not there is a redundancy situation.
- Is there a reduction of the work of a particular kind available,
- a closure of the place of business where the employee works or
- is the business going to be closed?
In many businesses in the middle of the pandemic it is going to be relatively easy for an employer to identify a redundancy situation.
[Additional and preliminary rules apply if there are going to be more than 20 redundancies as the employer will need to consider collective consultation and to notify a secretary of state. (See below).]
If it is a standard alone role that is potentially redundant it is much more straight forward than where there may be several employees undertaking that role or who are undertaking very similar roles and in which case they need to be “pooled” for selection.
If you have employees who are still physically at work then you might organise a meeting with them as a group to explain the general business scenario and the potential redundancies. In many cases that is not possible and an alternative is a video meeting. If you have staff who do not use social media or computers then that may not be practical, and you will have to adopt your procedure upon the circumstances taking into account practical difficulties and government guidelines on health and safety and current lockdown rules whatever they are at the time.
The first step is to notifying the employee(s) that they are potential at risk of redundancy.
You then need to have a meeting with the individual who might be at risk. In normal times that would be physical meeting but now most employees are happy to agree a video meeting or a telephone call if a physical meeting is not practical or not advisable for health and safety reasons.
You need to explain the reason for the potential redundancies to the employee. It may well be obvious in the current circumstances but explain nevertheless. Many employees do not usually address their minds to the running of the business so presume nothing.
You should explain how many jobs are potentially at risk and the relation to the employee’s role.
Explore ways of avoiding redundancies. For example, part-time working, short-time working, voluntarily redundancies, and utilising any government schemes available. Ask the employee if they are prepared to consider a sabbatical even.
You should always ask the employees for their own suggestions of ways to avoid redundancies.
The employer needs to explain the potential pools and provide details of a proposed selection criteria to be applied where there is a need to reduce the number of employees carrying out the same or similar roles and a selection needs to take place.
You should confirm in writing anything that you have done in any meeting or telephone call.
Once you have provided the selection criteria to employees you should always give them time to review and consider the criteria and to let you have feedback. The criteria needs to be objective insofar as possible, take advantage of the opportunity to consider any comments from the employees.
Once you have reached the stage of setting the criteria then each potentially redundant employee should be scored using the selection criteria and scoring guidelines. Ideally, at least two managers should do the scoring to help ensure objectivity. Obviously, in smaller businesses, this may simply not be possible but if so you may have to adjust for any issues that have occurred between any employees and their line manager.
After the provisional selection you should write to the employees provisionally selected inviting them to a further meeting. This meeting is a further opportunity for the employee to raise issues and concerns and suggestions to avoid the redundancy.
If no issues are raised by the employee you can then proceed to have a follow up meeting to confirm the outcome.
Each meeting invitation should include the statutory right of the employee to have a colleague or trade union representative present. If you are not having a physical meeting invite them to have that representative online with them. Each letter should be detailed insofar as possible setting out what you have done to date, when you did it and your reasoning to date.
Be prepared to deal with any queries as fully as reasonably practicable to avoid giving grounds for the employee to dispute the process.
Employees going through a redundancy process have the right to take time off to seek alternative employment. In the final meeting go through any redundancy package including statutory redundancy with the employee. Provide them with a calculation of their statutory redundancy if any.
How can employers ensure the redundancy selection process is fair and doesn’t discriminate?
When selecting criteria upon which you are going to mark employees and from their scores determine who will be selected for redundancy it is important that the criteria are objective insofar as possible. When you are assessing the performance and skills of staff you have to try and do it based on objective and verifiable factors if possible. It is always advisable to have more than one person mark against the criteria to try and manage out any personal influences between individuals.
ACAS have some guidelines to help but you have to consider the particular role and in selecting for redundancy you are trying to ensure that you maintain the best people to ensure the future success of the business and therefore it is a very important management decision and should be done with time and consideration.
What would be considered a ‘collective redundancy’? How does this process differ from the standard redundancy process?
Collective redundancy we take to mean collective consultation. This has to occur where 20 or more redundancies are going to take place over a period of 90 days or less. The rules vary depend upon the number of redundancies and the time period. The fact that there are going to be such a number of redundancies which means that a special process is added for the purpose of consultation, “collective consultation”, and notification is required to BEIS.
Collective consultation means that you cannot proceed with any dismissals for a minimum period once the consultation has started and there is a sanction of up to 90 days gross actual pay for each effected employee as a protective award if the rules are breached.
For the purpose of the rules dismissals are terminations by reasons of redundancy and include voluntarily redundancy.
Consultation has to take place with appropriate representatives of the effected employees who have to be given specified information to allow the consultation to take place.
There are rules on the election of appropriate representatives and if the employees affected are in a recognised trade union then the trade union must be consulted.
Once you have elected representatives the consultation must begin in good time before the redundancies at least 30 days for 20 or more and 45 days where there are 100 or more redundancies. There must be consultation and it must be undertaken with a view to reaching agreement on ways to avoid dismissals. It cannot be just a sham tick box exercise.
This collective consultation does not take away an obligation to consult individually with the potentially redundant employees.
Failure to follow the collective consultation rules can affect the fairness of the dismissal.
ACAS has a non-statutory guide which it publishes on how to manage collective redundancies which employers can refer to.
What would be considered an unfair dismissal?
A dismissal will be unfair if it cannot be justified on one of the grounds set out in the Employment Rights Act. The statutory grounds include redundancy. If there is a genuine redundancy situation therefore it can potentially be unfair dismissal.
However, it still requires a fair process and if a fair process has not been followed to select the employee for redundancy or to consult with them then it may still be an unfair dismissal.
What top tips would you give to a business that is facing the prospect of making a redundancy?
The first tip would be to open with the staff and be prepared to be honest about the situation the business finds itself in. Suspicion occurs when employees feel like they are being kept in the dark.
Always give staff the opportunity to consider options. Make it clear that you are prepared to look at any suggestions that they come up with which may incorporate one of the government’s schemes.
As a business, look carefully at whether you have staff with less than two years’ service and therefore do not qualify for unfair dismissal. Unless there are issues of potential discrimination that you need to be wary of, you may want to remove those staff from the process and indeed that may assist you in what would otherwise be difficult selection circumstances and in losing more experienced staff.
Always allow adequate time and encourage consultation on the criteria where you have a full selection situation. It is much better to deal with issues arising at that stage rather than at a Tribunal. Employees are often very good at picking out criteria which can be unfair the consequences of which may not have been envisaged by the manager. It gives a chance to review the criteria and adjust if appropriate.
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