The coronavirus pandemic has had an impact on many businesses, with the prospect of having to make redundancies unavoidable for many. Steps involved in the redundancy process, what an employee is entitled to and how a solicitor can help an employee facing the prospect of redundancy. We discussed this and more during #SolicitorChat.
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What steps are involved in the redundancy process and when should an employee speak to a solicitor about redundancy?
Whilst a redundancy situation can create a potential fair reason for terminating someone’s employment, if they have more than 2 years’ service and could bring a claim to an Employment Tribunal for Unfair dismissal, an employer should want to ensure that they carry out a fair process in relation to the termination and take appropriate steps to ensure that it is fair. What steps will be required can vary depending upon the circumstances but the first step is to notify the employee that they are at risk of being made redundant and to start a consultation process with them.
There should be consultation with the employee on why there is a redundancy situation, and what action the employer has considered to avoid it. If there is to be a selection pool, there should be a discussion on the criteria for selection and whether the employee has any comments on it. Usually this consultation would take place through a serious of meetings, but for health and safety reasons most employers are now arranging consultation meetings on line. How long the process should take and how many meetings are necessary for it to be a reasonable process may depend upon the issues raised during it. A solicitor can help an employee ask the right questions and challenge any inappropriate criteria or selection process which could make the difference between the employee keeping their job or not. Speaking to a solicitor sooner rather than later is therefore advisable. Once the employer had made their decision they are unlikely to go back on it.
If an employee does not qualify for unfair dismissal protection, then no formal procedure is required and the employer may simply choose to terminate the employment on contractual notice
What would be considered an unfair redundancy?
For a redundancy to be fair, there has to be a reduction or cessation of the work that the employee is doing. This can occur, for example through a business restructuring. Once this requirement is met, it comes down to the process that the employer has followed to advice and consult with an employee, and in particular where there is a selection pool, deciding upon fair and objective criteria to choose who stays and who goes and applying those criteria fairly. If this is not done, the process will be unfair and that may be considered an unfair redundancy. However, the financial benefits may be limited for an employee if the outcome would be the same if the process had been carried out fairly.
How much notice of redundancy is an employee entitled to?
Once the consultation process is complete and the employer serves notice of termination of employment then the normal rules apply that an employee is entitled to their contractual notice, or if greater, their statutory entitlement to notice.
Once an employee has more than 5 full years’ service they are entitled to a weeks’ notice for each full year of employment up to a maximum of 12 weeks for 12 years’ service and longer.
How much redundancy pay are employees entitled to?
The government website has an easy to use calculator for redundancy payments
With less than 2 years’ service; none. If more than 2 years’ service, it depends upon the age of the employee, length of service and what is a week’s pay for them.
An employee between the ages of 22 and 41 is entitled to one week’s pay for each full year of service after 2 years. There is a statutory cap on a week’s pay, currently £538. If an employee is over the age of 41 for any of those years of service the multiplier is 1.5 and not 1. Under 22 and the multiplier is .5. 20 is the maximum number of years which can be counted; the last 20 with someone with more years of service.
For example, for an employee who is 33 and has been employed for 2 years earning £400 per week, the statutory redundancy payment would be £800.
An employee who is 48, with 4 years’ service earning £400 per week would receiving £2400 (4×1.5x £400). If their salary was £600 a week, they would receive 4×1.5x £538 = £3228.
Statutory redundancy is tax free.
The Government announced today (30th July 2020) it is introducing legislation effective from tomorrow (31st July 2020) to provide that all employees who are on furlough must have their redundancy pay calculated on the basis of the pre-furlough pay. Their statutory minimum notice must also be calculated on the same basis.Introduced after initial #SolicitorChat
Can an employee challenge their employer if they feel they have been unfairly chosen for redundancy? How can a solicitor help?
If an employee believes they have been unfairly selected, they could use the appeal process if the employer has offered one. It is not an essential requirement of the process however.
They could raise a grievance if there is no appeal process.
If that is not successful they can bring a claim for unfair dismissal before an Employment Tribunal if they have sufficient continuity of service. This is basically 2 years although the rules on continuity may mean they qualify if they have just short of that.
Even if they do not have 2 years of continuous service, if they believe they have been chosen for a reason related to a protected characteristic, such as their age, they may still be able to bring a claim. A solicitor can help in an appeal or grievance procedure by assessing whether or not they have a potential claim and advising on how to present their case to their employer and possibly negotiate a settlement. If that cannot achieved the solicitor can advise on the legal and commercial merits of bringing proceedings before an Employment Tribunal.
The contents of this article are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this article. © Mundays LLP