Tips for dealing with redundancies
What will the workplace will look like after the furlough scheme ends?
While some employers may look at restructuring, redeploying staff to different roles or businesses, encouraging staff to take annual leave, reduce working hours, offer unpaid sabbaticals, cut pay or benefits or make temporary lay-offs, one of the things that may be a possibility is redundancies.
Briony McDermott, employment solicitor at Wake Smith, looks at some tips to help employers through a redundancy process, which may seem daunting to start with.
1. Genuine redundancy
Before commencing a redundancy process, always ensure that redundancy is the real reason for the dismissal and that the statutory definition of redundancy is met. Examples of genuine redundancy situations would be where there is a reduced requirement for work of a certain kind, or it is necessary to close a particular branch or workplace due to customer/market demand. It is important not to use a redundancy as a reason to dismiss employees where the real reason for termination is poor performance or misconduct. At this stage it may be prudent to put together a business case to support the redundancy situation.
2. Selection pools
One of the most important stages in a redundancy is identifying the appropriate pool from which to select potentially redundant employees. When identifying a pool, a good starting place is to consider what particular type of work is ceasing or diminishing, and who carries out that work? Interchangeable skills may also need to be considered as it may not be quite as straightforward as placing, for example, all operatives at risk. It is possible to have a pool of only one employee, for example because the work they carry out is unique and diminishing.
3. Fair and objective selection criteria
Selection criteria should be objective and ideally measurable, for example with reference to personnel records and /or appraisals. Potentially fair selection criteria can include, for example, performance and ability, disciplinary records and attendance records (although absence for pregnancy and disability, related absence should be disregarded). Employees should be scored against the criteria, to determine which employees score the lowest. It is recommended that two managers separately undertake the scoring exercise for each employee, in the interests of objectivity.
A proper and meaningful consultation needs to be carried out with the affected employees, right from the beginning of the process. This is fundamental to the fairness of any dismissal for redundancy. Employees should also be provided with adequate information, within an adequate time frame. Any employee response to the consultation should be carefully considered and responded to by the employer. This should be documented in writing and through written notes of consultation meetings.
5. Include absent employees in the process
Remember to include employees on long-term sickness absence or maternity/parental leave in the redundancy consultation process. They should be kept informed and receive the same information in writing as other employees. They should also be consulted with in person where appropriate and reasonable adjustments and flexibility should be offered to accommodate the individual’s circumstances. Failure to do this could leave you vulnerable to claims for discrimination.
6. Suitable alternative employment/time off to look for work
Employers should make reasonable efforts to search for suitable alternative employment, and where available, bring it to the attention of employees at risk of redundancy. Where there are more than one employees at risk of redundancy who are interested in the same alternative role, they should be invited to apply for the role and a normal interview process should be followed. A dismissal is likely to be unfair if, at the time of dismissal, the employer gave no consideration to whether suitable alternative employment existed within its organisation.
It is important to remember that employees who are on maternity leave at the time of the redundancy process have an automatic right to be offered any suitable alternative roles and would therefore fall outside of the normal interview process.
An employee whose role is confirmed as redundant and is given notice of redundancy has a statutory right to take a reasonable amount of time off during working hours to seek alternative employment, or to arrange training (provided they have at least two years’ continuous employment at the termination date). The employee is entitled to up to 40% of a week’s pay as paid time off to attend interviews or arrange training.
It is important to check the employee’s contractual rights under their employment contract and staff handbook, in particular with regard to notice provisions, benefits, bonus entitlements, stock options and holiday entitlement. In addition, make sure that you calculate the correct statutory redundancy payment (as well as any company enhanced payment in accordance with any company policy and/or custom and practice) and apply the right tax treatment to all of the post-termination payments and benefits.
8. Consider a settlement agreement
Employers often offer an ex gratia payment to employees in addition to their contractual and statutory rights, in exchange for entering into a settlement agreement under which the employee waives the right to bring any legal claim against the employer arising out of their employment or its termination.
Sometimes this decision is reached after carrying out a risk/benefit analysis, or it may be the employer’s custom and practice or it may be a gesture of goodwill. Whatever the circumstances may be, it is usually worth considering whether a settlement would be appropriate in order to tie up all of the loose ends.
Please note that these tips provide guidance for employers when carrying out redundancy processes where less than 20 employees are to be made redundant from one establishment within a 90-day period. Where more than 20 redundancies are to be made, then it is important to follow the rules on collective consultation.
For further advice on handling the redundancy process or other employment law matters contact Briony McDermott at Wake Smith Solicitors on 0114 266 6660.