Redundancy Advice Archives | Employment Law Services (ELS) LTD

Redundancy – Getting it Right For Employers

Posted on 7 June 202112 June 2023 by @deliver_els

On 26 May 2021, Kemi Badenoch MP, the Minister for Equalities, made a statement outlining that the gendered impact of the pandemic has not been clear cut. In summary, the Government confirmed that more men were made redundant during the pandemic than women.

Workplace Redundancies – What Every Employer Should Know

Although women were furloughed at a disproportionate rate than men, she stated that the latest employment figures indicated that more men were made redundant than women. As a response, the government is working to address both men and women with its economic support measures.

Redundancy and the Impact of COVID-19

Despite the various resources intended to support businesses and protect jobs, an increasing number of employers are finding it difficult to retain current staff levels as COVID restrictions continue to impact.
With the CJRS ending in Septmber, many employers are now looking closely at redundancies.
Correctly identifying the circumstances that give rise to redundancies is the first step to ensuring any subsequent redundancy dismissals are fair.

A recent survey from Acas has found that over a third of employers (37%) are likely to make staff redundancies in the next 3 months. The poll found that:

6 out of 10 large businesses said they were likely to make redundancies in the next 3 months
for businesses that are likely to make redundancies, over a quarter (27%) said they plan to do this remotely over video chat or a phone call
1 in 4 (24%) bosses are unaware of the law around consulting staff before making redundancies – this increases to 1 in 3 (33%) where businesses have fewer than 50 workers

Circumstances That Can Give Rise to a Redundancy Situation

There are various circumstances that can give rise to a redundancy situation, including:

Diminished need for employees to do work of a particular kind.
Changes to terms and conditions where more than 20 employees are affected, and dismissal is a possibility.
Reduction in the numbers of employees doing a particular role.
Removal of a role or group of roles.
Closure of a department, site or entire business.

Many Employers often conflate the aforementioned circumstances with other reasons when considering redundancies, but they do so at their peril. For clarity, the following reasons do not give rise to a redundancy situation:

Issues of performance, conduct.
Where an external company could do the work better or more cheaply.
The same work could be done under different terms and conditions e.g. less qualified.
Where the employee is required to do additional work, but it remains “work of the same particular kind” and they refuse to do that.
Transfers of employment.

Before considering redundancies, it’s important that employers review the situation carefully before deciding to progress with redundancies. Key points employers should consider include:

Issues that need to be addressed in a redundancy situation:

Alternative to Redundancies

Employers have a legal obligation to consider how they might avoid compulsory redundancies. Some of the alternatives they should consider include:

Short time working and/or temporary layoffs – the new Job Support Scheme is intended to facilitate this.
Voluntary redundancy.
Temporary reduction in pay or hours.
Permanent reduction in pay or hours.
Redeploying to alternative roles and providing retraining (if reasonable).
Dismissing short service employees (where no risk and T&Cs allow).
Reducing/removing benefits.
Stopping/limiting overtime.

Other considerations include:

Is there a job that would be a suitable alternative within any associated business or alternative sites?
Does ‘Bumping’ apply? This is where an employee not previously at risk is put at risk to ‘save’ other employees.
Are any affected employees pregnant?
Are any affected employees on maternity leave?
Are any senior roles affected?

Employers will need to proceed with caution if any of the above scenarios apply.

If Making Less than 20 Redundancies

Under 2 years’ service:

If under 2 years’ service, and no risk of discrimination, a shorter process can be followed if the contract/handbook allow that.
No entitlement to redundancy pay, just notice pay.

Risk of discrimination or over 2 years’ service:

A minimum of three meetings (at risk, how can we avoid, if no ideas, dismissal).
If pools of candidates, objective criteria will need to be used relating to that particular role.
Scoring needs to be fairly done.
Right of appeal.

If Making 20 or More Redundancies

Where 20 or more employees to be made redundant at one establishment within 90 days:

Need to collectively consult with appropriate representatives.
Representatives are recognised trade union or employee representatives elected through a ballot.
Must provide prescribed information via HR1 to BEIS.
Must consult for at least 30 days before the first dismissal or for 100 days if more than 100 employees.
Right of appeal.
Protective award for a failure to consult = 90 days gross pay.

Where Most Employers Go Wrong With Redundancies

Employee Consultation

To avoid the risk of being deemed not to have consulted properly, employers need to consider the consultation process carefully and ensure:

Consultation is meaningful, with a view to getting agreement, not a means to an end.
It includes those off on long term sick leave, family friendly leave, fixed term (funding).
They involve a recognised union or collective consultation body (if authorised to consult on such matters), where required.
Letters are issued at each stage and 48 hours’ notice between meetings and the right to be accompanied is made clear.
Minutes are taken at each meeting.

The Implications of Getting Redundancies Wrong

Unfair dismissal claims

Not genuine redundancy (the real reason for dismissal).
- Unfair process.
- Unfair selection.
- Unfair scoring.
  - Maximum compensatory award £88,519.

Discrimination claims.

Unlimited compensatory award.

Workplace Redundancies – What Every Employer Should Know

Posted on 19 August 202012 June 2023 by @deliver_els

The coronavirus pandemic has had a severe impact on the economy and it is inevitable that redundancies will be on the rise, but getting this wrong could prove costly for Employers.

The Legal Definition of redundancy

Redundancy is defined as circumstances where the termination of employment is attributable to the fact that the employer has ceased, or intends to cease, to carry out business for the purposes of which the employee was employed.

If a business no longer requires work of a particular kind, then employees whose role it is to carry out that particular work could reasonably be dismissed by way of redundancy.

Where work of a particular kind had ceased, or is expected to cease or diminish then this can also lead to redundancy.

Consultation

An employer with more than 20 staff at risk of redundancy in one workplace has a legal obligation to consult with staff at least 30 days before any staff are dismissed.

Consultation and notice are completely separate. Consultation should cover the reasons for the proposals to make redundancies, identification of the job groups at risk and the number of staff who are likely to be covered by the proposals.

The employer should also identify the selection criteria being used to score the staff who are at risk. Timescales for the procedure and proposed termination dates should also be put to staff. Where there are 99 staff or more in one workplace consultation should begin at least 45 days before the proposed date of any dismissal, however the employer can chose to consult over a longer period should they wish to do so.

The consultation specifically should consider ways to avoid the redundancy, ways to minimise the number of staff being made redundant and ways to mitigate the impact of the dismissal.

It may seem strange, from an employer’s perspective, that there is a legal obligation to look at ways of avoiding the dismissals as part of the consultation process. However, in reality, staff on ground level can sometimes suggest better working practices which allow the number of staff being dismissed to be minimised.

Staff can mitigate the impact of the dismissal by using the consultation period to apply for another job.

As well as collective consultations, which take place through trade union representatives and workplace representatives, staff should also be offered individual consultations.

Failure to consult properly can leave the employer exposed to the risk of a protective award claim. Any employee who is made redundant without proper consultation can claim a protective award of up to 13 weeks’ pay, if 20 or more staff were made redundant in the same workplace.

How should an employer deal with redundancy?

There are certain steps that an employer must take before they decide to make anyone redundant.

They then need to identify a suitable pool for selection. The employer can identify the pool by identifying which jobs groups it needs to consider cutting head count in.

Depending on the nature of the business, it can be as easy as identifying a particular group of worker. However, the employer must carefully consider whether other staff who do not technically fall within the same job group should be included in the pool.

For example, interchangeable roles, or roles in different parts of the business which are broadly similar.

A selection criteria should be used to look at various elements of an employee’s work history and performance. The selection criteria should be reasonable and objective. It can include elements such as disciplinary record, skills and qualifications, time keeping, absence levels and suitability to carry out future work demands for the employer.

The scoring should be used objectively, and not just as a tick box exercise.

It is important that the scoring is applied in a way that does not discriminate against the individual being scored. For example, time spent on maternity leave should not be recorded as an absence which brings the scoring down. Similarly, any absence which is related to a disability should not be included.

The employer should be mindful of using scoring criteria which might cause indirect discrimination. For example, using length of service as a scoring criteria might be discriminating against younger members of staff are are likely to have shorter service. As such, an approach of last in, first out should can leave an employer exposed to the risk of a discrimination claim.

Notice Periods

Notice periods are sometimes set out in an individual’s contract of employment. However, in the absence of this statutory notice periods would apply. These are as follows:

1 month – 2 years’ service – 1 weeks’ notice
2 years’ service or more – 1 weeks’ notice for each year of service, capped at a maximum of 12 weeks.

Notice is separate from consultation and the employer must have started the consultation process before they can serve notice. The employee should either be allowed to work up until the end of their notice period or should be paid in lieu of notice.

Redundancy Pay

Statutory redundancy pay has to be paid to all employees who made are redundant after been employed for 2 years or more. Staff who have less than 2 years’ service are not entitled to a statutory redundancy payment.

Statutory redundancy pay should be paid based on an employee’s individual weekly pay rate and is capped at a maximum of £538 per week. The weekly entitlement amount for each full year of service are as follows:

0.5 weeks’ pay for each year of service, for staff aged 22 and under
1 weeks’ pay for each year of service, for staff aged 22-41
1.5 weks’ pay for each year of service, for staff aged 41 and over

Statutory redundancy pay is capped at 20 years’ service.

An individual’s contract of employer might give them the right to an enhanced redundancy payment, which is more generous than the statutory amount. If this is the case, the employer must make the redundancy payment based on the contractual amount.

Other payments

Employees being dismissed by way of redundancy are entitled to any accrued but untaken holiday pay which is due at their termination date.

They are also entitled to receive their normal salary up until their termination date.

Employees who do not receive all of the payments that they are entitled to can pursue a claim for unlawful deduction of wages in the Employment Tribunal.

Is redundancy always fair?

Redundancy is a form of dismissal and if it isn’t considered correctly it can give rise to a claim for unfair dismissal or a discrimination claim.

Employment Tribunals are generally of the view that scoring criteria must be objective and can’t be scoring should not be reached in a haphazard way. An employer really needs to be able to justify each score for the individual employee.

Any scoring criteria which unfair or unreasonable in a way which is glaringly obvious will most likely be criticised by an Employment Tribunal.

However, what the Employment Tribunal won’t do is make any kind of judgment on what the employee, or others who they compare themselves to, should have scored. It is not the role of the Tribunal to say that one employee should have been made redundant instead of another.

Where an Employment Tribunal makes a finding of unfair dismissal or discrimination the employee is likely to be awarded compensation.

Time Limits

The time limits for making a claim in the Employment Tribunal are 3 months, minus a day, from the date that you are made redundant, the date that you did not received a payment you were owed, or the date of any act of discrimination.

Support for Employers

The COVID-19 pandemic and associated furlough scheme continues to present numerous and complex challenges for Employers.

If you are an Employer and require advice and support on extending full furlough, introducing flexible furlough, or are contemplating a restructure/reorganisation and/or redundancies as a result of the ongoing COVID 19 restrictions, call us now on 0800 612 4772 or Contact us via our website and we will set out clear options for you to help ensure you comply with your legal obligations.

CJRS: Claiming for Employees Serving Their Notice

Posted on 9 July 20207 June 2023 by @deliver_els

Although the CJRS has now been extended to 31 October 2020, the government has made it clear that it will expect employers to make a financial contribution towards furloughed employees’ furlough pay from 1 August 2020. Furloughing employees beyond that date will therefore come at a cost to employers and many are considering whether they can afford to retain all employees going forward.

CJRS: Claiming for Employees Serving Their Notice

There may therefore still be fair reasons for employers to make furloughed employees redundant despite the extension of the scheme but the latest (third) Treasury direction appears to introduce a new requirement which is arguably designed to prevent the use of CJRS funds.

Can an employer make employees on furlough redundant?

We have confirmed in previous bulletins that the Employees’ CJRS guidance states that an employee can be made redundant while on furlough or afterwards, and that an employee’s redundancy rights will not be affected by being furloughed. However, an employer cannot claim reimbursement of redundancy payments under the scheme (Employers’ CJRS guidance).

The position in respect making furloughed employees redundant and not being able to claim reimbursement of redundancy payments under the scheme has not change, but the latest (third) Treasury direction appears to introduce a new requirement which is arguably designed to prevent the use of CJRS funds to pay employees working under notice.

Claiming through the CJRS for redundant employees

Although the guidance seems to confirm that a furloughed employee may be made redundant, there has been criticism of employers that have taken this approach. The aviation minister, Kelly Tolhurst, suggested in response to British Airway’s decision to dismiss employees on furlough that the Treasury should review the CJRS to ensure that it is not used to pay the wages of employees on redundancy notice (although the criticism may have been based on the fact that it appears that the dismissals were with a view to offering new roles with inferior terms).

On 29 June 2020 the Secretary of State for Work and Pensions expressed similar concern about the use of CJRS funds as a means of paying wages without an intention to keep the relevant employees employed.

The third Treasury direction appears to introduce a new requirement which is arguably designed to prevent the use of CJRS funds in this type of situation. Paragraph 2.2 states that a claim should only be made where the payment will be used to continue employment. This suggests that it would be contrary to the purpose of the scheme to use the funds where employment has been terminated and the employee is working under notice.

The schedule to the third Treasury direction states that the previous Treasury directions continue to have effect subject to the modifications in the schedule. It appears that the Third treasury direction is intended to have retrospective effect, although this is not entirely clear.

Employers may take some comfort from the comments of the Financial Secretary to the Treasury on 8 July in response to a question in Parliament on this issue. He responded that employers are permitted to continue to claim under the scheme for a furloughed employee where they are serving their notice period. However, this is not reflected by the wording of the third Treasury direction and has not been expressed in writing by HMRC or the government.

Whereas previously and based on the earlier iterations of the Treasury direction, we would have been comfortable advising Employers that they could continue to claim under the scheme for a furloughed employee where they are serving their notice, we would now, in light of the latest (third) Treasury direction, recommend that Employers intending to use CJRS funds to pay employees working under notice should contact HMRC for guidance and would advise against doing so unless or until they receive confirmation from HMRC that they can.

Support for Employers

Making staff redundant – get it right or risk facing costly Employment Tribunal claims

Posted on 31 October 20179 June 2023 by @deliver_els

Recent headlines which saw Sainsburys announce they would be cutting 2,000 jobs, BAE Systems almost the same and Vauxhall 400, has highlighted the importance of businesses having the correct HR and legal resources to ensure organisations are following a fair and proper process.

Smaller companies rarely have inhouse resources to assist with similar problems, thus, making small scale redundancies comes with financial danger.

Employers should confirm in the first instance that it is a redundancy situation

Redundancies occur in three main scenarios:

(1) The business is having to shut down

(2) The location of work is closing

(3) The need for a specific role dries up

It is important that employers select individuals in a fair manner, for example because an employee’s level of experience or capability to do their job. Employers must not select employees on the grounds of age, gender, disability and pregnancy. Failing to comply with these rules will result in an unfair dismissal.

In addition, before an employer decides to make an individual redundant, they should consider other alternatives to the problem. For example, stop recruiting new staff, cut over time and place employees on lay off.

Redundancy Consultations

Should you fail to consult employees in a redundancy, any redundancy made will almost certainly be classed as unfair, exposing employers to an Employment Tribunal claim.

Consultations should include:

– An explanation of the redundancy

– A discussion of any alternative

– Advice on alternative employment

– Listening to any proposals from those affected

– Asking if any employees would like to volunteer for redundancy

Selection Criteria

In this event, employers should consult those affected regarding the selection criteria. Examples of such criteria include:

– Attendance record

– Disciplinary record

– Skills and experience

– Standard of work

– Aptitude for work

Following this, employers should apply this criteria to the roles at risk via a scoring system. This should be applied objectively and personal opinions should not be taken into consideration. On calculating the final scores, employers will establish those employees who score lowest.

Provide those affected with notice

The employees who have been selected for redundancy should be given proper notice of the dismissal. Notice periods are usually the same as those you would give when terminating a contract of employment. Further, employers may establish they have other work available within the business. In this instance, a suitable role should be offered within the notice period before the end of employment and as early as possible.

It is important to note employees with 2 years continuous service at the business are entitled to a statutory redundancy payment up to a maximum of £14,670.

Comprehensive Employment Law Support for Business

Employment Law Services (ELS) is a leading provider of employment law and HR guidance and support to SMEs and Medium Sized Businesses in Scotland and England & Wales. We are proud of our strong reputation for delivering an effective service to employers across a range of sectors including Food and Drink, Telecoms and Distribution.

A number of our team members are recognised as experts in their field, qualified to provide bespoke assistance to clients that reflect the commercial realities they face. Of all areas of UK law, employment law is arguably one of the most complex and fast changing. This requires employers to consult advisors who are up to date with developments and able to keep them appropriately advised on the changing nature of their obligations.

Our service places priority on providing assistance to employers that is prompt and effective. The team at Employment Law Services (ELS) take their role very seriously, and work in partnership with employers to discharge their responsibilities to employees when pursuing a redundancy scheme. We will also be happy to provide onsite guidance and support to businesses, ensuring that they are appropriately advised on the day-to-day realities of operating a redundancy scheme. Contact our team today and find out how we can help you.

Please note, the information in this article is for guidance purposes only and it is therefore advised that employers seek legal advice before embarking on any enforcement action.

Pregnant women, new mothers and redundancy – don’t get caught out!

Posted on 2 October 201712 June 2023 by @deliver_els

If an employer finds that they need to restructure their organisation and make redundancies, then it is extremely important that they are careful about the way they treat pregnant employees or employees on maternity leave.

In the first instance, it is important that employers understand pregnancy and maternity protection.

The purpose of this legislation is to:

Protect the health of mothers and babies
Minimise the problems that working women face due to starting a family

The Maternity and Parental Leave Regulations 1999 provides that from the beginning of pregnancy to the end of maternity leave is a ‘protected period’.

The law states:

During this protected period, it is viewed as unlawful for a woman to be treated unfavourable because of her pregnancy or because she is on maternity leave
A woman returning from maternity leave has the right to return to the same position as before she left; her position cannot be filled even if the employer believes the interim is a better employee
Should an employer select an employee for redundancy on the grounds of pregnancy or maternity leave, this will be viewed as unlawful discrimination and unfair dismissal
Failing to consult an employee on maternity leave about redundancy will be viewed as unlawful discrimination
A female made redundant whilst on maternity leave, must be offered another suitable position. She should not be required to re-apply to the organisation.

How can employers manage redundancy that involves pregnant employees/employees on maternity leave?

If you are reorganising the workforce or downsizing and you need to make employees redundant, which includes a pregnant employee or one that is on maternity leave, employers should:

Ensure the redundancy is genuine and unavoidable
Make sure the employee is consulted
Identify non-discriminatory selection criteria
Look at alternative roles

Is the redundancy genuine?

Employers should ask themselves this question in the first instance, and ensure the redundancy is for a genuine reason and not caused by the pregnancy or maternity leave, genuine reasons include – closure of the business.

Employers often find that whilst the employee is on maternity leave, the business runs fine without her by readjusting and reorganising. However, this will not be viewed as a valid reason to make the employee redundant.

How should employers consult employees on maternity leave?

Employers should raise the issue as early as possible with all employees, alerting them of the proposed redundancies.

When doing this, employers should:

Raise the reason behind the redundancy
Discuss alternatives, such as voluntary redundancy or reducing working hours
Alert employees at risk of the selection criteria

Failing to consult an employee on maternity leave is likely to be viewed as discrimination should the employee take a claim to the Employment Tribunal. If employers are reluctant to contact an employee on maternity leave in case of disturbing them, they should discuss preferred contact options prior to the employee going on maternity leave.

How should employers decide the right selection criteria?

If the employer chooses to use a selection process to decide who to make redundant ACAS states “it must be transparent, known by everyone it applies to and non-discriminatory.” Further, this process should be objective and measurable.

Expected criteria to be considered includes:

Qualifications and the skills of that employee
Performance
Attendance record
Disciplinary record
Customer feedback

It is important that when considering criteria, employers do not disadvantage the employee on the grounds of sex, pregnancy or maternity leave.

Is there a relevant alternative position the employee can be put in?

On occasions, employers may have alternative positions that they can offer a redundant employee. In this event, an employee on maternity leave who is being considered for redundancy must be offered this vacancy before anyone else. If you fail to do this, her dismissal may be viewed as automatically unfair.

If there is no other vacancy to be offered, a woman can be made redundant during maternity leave if the reason behind the redundancy is unconnected with the pregnancy or maternity leave and the employer can display they followed a fair redundancy process.

Employment Law Support for Employers

If you require employment law advice on any of the issues raised in this article, or any other employment issue give us a call today on 0370 218 5662. You can also find out more about our fixed fee HR packages here and fixed fee employment law packages here, or get in touch.

Please note, the information in this article is for guidance purposes only and it is therefore advised that employers seek legal advice before embarking on any enforcement action.