According to a new ACAS survey of British businesses, almost 1 in 5 employers expect to make redundancies in the next year, with large businesses more affected than SMEs. Managing redundancy can be a tricky area to navigate.
Employers have certain obligations when considering redundancy, whether it relates to a standalone position or larger numbers. Whilst redundancy is a potentially fair reason for dismissal, getting it wrong can leave the employer exposed to costly claims of unfair dismissal, and in some cases, unlawful discrimination. Issues that commonly arise include the following.
How to determine the correct redundancy pool
Where there has been or will be cessation or diminution of a particular kind of work, a selection pool is likely to be relevant. The employer will need to decide whether the pool will be just those performing the same role, or if it will also include those whose skills are interchangeable. The Tribunal will expect the employer to have given genuine consideration to what the pool should be, and be able to show it.
Where an employee is included in the pool, they must have an opportunity to question their inclusion as part of the consultation process. Standalone roles will by their nature ordinarily result in a pool of one, but consideration may need to be given to including subordinate roles where the roles are not too dissimilar in nature and remuneration (known as ‘bumping’).
What selection criteria should be used?
Any measure which puts those with a particular protected characteristic at a disadvantage (e.g. sex, age, disability) can lead to an unlawful discrimination claim if not adjusted to remove such impact.
A common example is the use of absence data, which can have a disproportionate impact on employees whose absence is related to a disability. In such cases, the employer would be well-advised to disregard any such disability-related absence. Similarly, any absence which is related to pregnancy or maternity should also be disregarded. The application of a fair and non-discriminatory redundancy selection process is an area in which employers commonly fall down.
Employers should therefore adopt a fair selection process when effecting redundancies, i.e. via the use of a robust selection matrix, consisting of several criteria which are consistently applied to each employee in the pool.
When is the duty to collectively consult triggered and what does it consist of?
If 20 or more redundancies at one establishment are contemplated within a 90-day period, the employer has extra obligations to carry out collective consultation before taking any action. This needs to take place with a recognised trade union or with employee representatives elected by the affected employees.
Such consultation should involve a genuine attempt to avoid the redundancies or mitigate their impact and must commence at least 30 days prior to any dismissals (45 days before where 99+ redundancies are contemplated). The penalty for failing to comply is a protective award for each affected employee of up to 90 day’s pay!
What is ‘bumping’ and when should it be considered?
The dismissal of an employee whose job is still required but is given to an employee whose job is no longer required, mays still fall within the redundancy category. In such circumstances, it does not necessarily matter that the type of work for which there is a reduced requirement is not the work undertaken by the employee who is ultimately made redundant. This type of situation is commonly referred to as ‘bumping’, i.e. the potentially redundant employee ‘bumps’ another employee out and takes their place. This typically occurs when a supervisor or line manager is potentially at risk, but their subordinate’s role is not.
To bump or not to bump? There is no simple answer to this. However, it is important that employers give careful consideration and set out a reasonable justification to allow bumping. Factors to think about include:-
- Has the employee at risk suggested the employer considers bumping?
- Does the ‘at risk’ employee have the necessary skills/experience to undertake the subordinate’s role – would they perform it as effectively?
- What is the relative length of service of those involved?
- How long is it since the supervisor carried out the role of the subordinate?
- Would there be a significant drop in salary or loss of benefits?
- Would it require a significant change to other terms and conditions, such as location or working hours?
What are the arrangements for pregnant workers or those on maternity leave?
Situations involving the redundancy of employees who are pregnant or on maternity leave can be a complex area to navigate. Employees returning from ordinary maternity leave (the first 6 months) have the right to return to their original job unless that job is no longer available. Employees on additional maternity leave (the second 6 months) have the right to return to the same job unless it’s not reasonably practicable for them to do so. In which case, they must be offered a suitable alternative role on terms which are no less favourable.
Redundancy may be an option if there is a reduced requirement for the employee’s job. However, there are issues involved with choosing selection criteria that could indirectly discriminate against pregnant employees or those on maternity leave.
In addition, employees currently on maternity leave have a right to be offered ANY alternative employment that exists, provided that it is deemed suitable, both in respect of the type of work and where it’s to be done. The terms and conditions must also be no less favourable than the employee’s current terms and conditions.
The duty to look for alternative employment
Employers have a duty to make reasonable attempts to find alternative employment for anyone facing redundancy, and employees on maternity leave have an additional right to be offered any suitable alternative role that exists.
In both cases, the law provides for a trial period of 4 weeks during which both parties can decide if the alternative role is suitable. If at the end of this period (which can be extended if both parties agree in writing) either party feels that the alternative role is unsuitable, then employment may still be terminated on the grounds of redundancy, with the employee retaining any statutory right to redundancy pay.
If the employer is the one to decide that the role is unsuitable, the Tribunal will examine the reasonableness of this decision to dismiss. That being the case, the employer should have a robust paper trail to evidence their reasons why the work trial was unsuccessful. It is also advisable that the employer speaks to the employee well before the end of the work trial to allow them to address any issues which have arisen.
How can EML help?
If your organisation is one of those that is anticipating the need to make redundancies, you can find an abundance of resources available for free download on our website, including factsheets on how to manage the process, how to deal with collective consultation and the special issues relating to pregnant employees. There is also a sample selection matrix and an individual consultation checklist template.
Alternatively, register for our FREE seminar on Tuesday 24 January at The Base Warrington, and join our experts who will discuss the complexities of redundancy in more detail to ensure a compliant process.
Our team are on hand to provide additional advice with regards to redundancy, or any other aspect of HR and Employment Law, so please contact us on 01942 727200 or at firstname.lastname@example.org