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Keeping On The Right Side Of Redundancy Rules

17 Jul 2020

With more and more redundancies being announced by businesses around the North East and across the UK, Sarah Hall, partner in the employment team at Hay & Kilner Law Firm, offers advice on risk areas when managing what can be a complex and emotional process.

Over the last few weeks, it’s seemed like every second news story has been about the latest well-known business to announce dozens, hundreds or even thousands of pandemic-related redundancies.

Research carried out in April by the Chartered Institute of Personnel and Development found that one in every four UK employers were expecting to make permanent redundancies because of the coronavirus crisis – and we’re now seeing these expectations turning into reality on a daily basis.

It’s reasonable to expect that the number of proposed redundancies will unfortunately continue to increase for the foreseeable future, especially as businesses look towards the end of the furlough scheme in October and start to plan what resources they are likely to need in the future.

It’s essential that any employers in this position plan their approach to potential redundancies very carefully, so that the costs of making them aren’t increased by expensive procedural mistakes which result in additional compensation payments.

There are many potential problems that need to be identified and addressed at the earliest possible opportunity, so that the redundancy process can be well thought-out, objective and ultimately successful.

For example, presenting redundancy proposals as final decisions prior to consultation, rather than ‘proposals,’ or not considering alternatives to compulsory redundancy, including voluntary redundancies, could lead to problems further down the line.

There must be a 30-day consultation period with representatives (and notification to the Secretary of State for BEIS) before any notice of redundancy is given when more than 20 employees may be made redundant, and if 100 or more redundancies are proposed, the minimum consultation period is at least 45 days.

The pool of employees being considered for redundancy should not be drawn up too narrowly, especially if it is done solely by reference to job title without proper consideration of the individuals’ duties.  Other employees who carry out similar types of work or who have interchangeable skills should also be considered for inclusion in the pool to ensure fairness.

Coronavirus

While employers will of course want to ensure that the process retains the best employees in terms of skills and expertise to meet the future needs of the business, including only unpopular or difficult employees in a redundancy process without justification could lead to issues arising as the process progresses.

The selection criteria used must be objective and verifiable by reference to data, such as appraisals, and two assessors should ideally be used to diminish the risk of subjectivity, with at least one of them having direct knowledge of the relevant employees.

Employers must also ensure that the selection criteria are not discriminatory.  Using “last in, first out” as the main criteria for selection, for example, could discriminate against staff by reason of their age.

Not including employees who are on maternity leave in the pool could be prejudicial to those who are, while selecting them for redundancy because they are on maternity leave would make the dismissal automatically unfair and amount to sex discrimination.

Depending on the circumstances, employers may also need to consider whether an employee whose job is redundant should be redeployed to another existing job, with the employee in that job instead being made redundant.

Notice of any final meeting at which dismissal is to be considered must be given in writing together with any provisional scoring on which selection of redundancy has been based.

Evidence must be available to objectively justify this scoring, while it is essential that employees are able to state their case before any final decision is made and can appeal the resulting decision.

These are just some of the many potential pitfalls that can form part of any redundancy procedure and if you’re facing this process, it makes sense to take professional advice on how to manage to minimise the chances of making any costly mistakes.