Making the tough choices: A brief guide to redundancies
With the UK reeling from one of the biggest economic shocks as a result of the pandemic, and with waves of the virus expected to last through the winter, businesses across the country need to rapidly adapt their practices and procedures to suit the current situation.
The objective for each of these is to ensure their business remains viable. Sadly, this sometimes requires reorganisations and redundancies or reduced hours.
For many businesses, this was a decision which could be delayed while the workers they could not afford to employ were supported by the Coronavirus Job Retention Scheme CJRS “furlough scheme”. But with this scheme coming to an end and being replaced by a scheme which supports people who can work part time only, employers must confront these matters head on. Now, the question employers face is whether furloughed employees can be brought back to work under review or whether redundancies may be necessary.
Redundancy occurs when an employee’s job no longer exists. There are many reasons behind it, including an immediate need to reduce your team, keep the business from closing, or if the job role is no longer required.
Because these are decisions which directly affect peoples’ livelihoods, it’s vital that you follow the correct redundancy process to protect the interests of your business and ensure your employees are treated lawfully and fairly.
Where redundancies are necessary, there are certain steps you need to take to manage the process in line with your statutory obligations. Failure to do so can lead to unfair dismissal claims as well as other potentially costly claims and it can also harm your relationship with the rest of your team as well as your reputation.
What is the Redundancy Process for less than 20 employees?
There are no set rules or timescales for consulting with your affected employees if that number of employees (ie those at risk of redundancy) is less than 20 (over a 90 day period). Legally however, you must still consult and follow some key steps to make the redundancy lawful. This process would involve a series of meetings in which the employee should be encouraged to comment on the redundancy proposal prior to any final decision being made.
Employees must legally be given the right to ‘be accompanied’ to redundancy meetings, even if such meetings are carried out remotely or virtually.
Regular, honest and two-way communication throughout the redundancy process is vital so that employees don’t rely on the hearsay or rumour to learn about what’s happening. Take time to explain the reasons for the redundancy (legally there must be a clear business rationale) and the actions that were taken to avoid redundancy and facilitate redeployment.
Make sure that everyone knows their contribution to the business was valued and that redundancy selection is in no way a reflection on them personally. Be prepared to deal fully with people’s feedback and concerns, and ensure that the information given out is clear, and understood by those concerned. This is an emotive issue and it’s easy for tempers to rise or for people to become distraught so you should be prepared to respond appropriately.
What is the Redundancy Process for more than 20 employees?
If the employer is proposing to make 20 or more employees redundant within a 90 day period there is a legal requirement for collective consultation with the affected employees. During any collective redundancy process, the employer must:
- Consult with any recognised trade union or, if none, with other elected employee representatives
- Start consultation in good time – at least 30-45 days before the first dismissal. No dismissals can take effect until this minimum time period has lapsed. If it concerns 20 – 99 employees, there is a required 30 day minimum consultation. For 100+ employees, there should be a minimum of 45 days.
- Consult on ways of avoiding dismissals, reducing the numbers to be made redundant and mitigating the impact of dismissals
- Disclose to the appropriate representatives, the information concerning the proposed dismissals
- Notify the RPS (Redundancy Payment Service) at least 30 or 45 days in advance of any dismissals taking effect by completing the online HR1 form.
Redundancy selection process and criteria.
Employers should use a selection ‘pool’ where planning to make one or more employees redundant from the same post to ensure that employees are selected in a fair way.
A selection pool is a way of grouping employees who are at risk of redundancy.
A selection pool should include:
- employees doing the same or similar role who are at risk of redundancy
- employees with the same or similar skills in other roles who are at risk of redundancy
In order to select from the pool of employees, it will be important to apply an objective selection criteria;
- standard of work
- skills, qualifications or experience
- attendance record, which must be accurate and not include absences relating to disability, pregnancy or maternity
- disciplinary record
Selection criteria must not be discriminatory.
Employers can also ask employees to reapply for their own jobs to help decide who to select. Appropriate criteria should be applied when interviewing to ensure that individuals are selected in a fair way.
Right to appeal
Employers should set up an appeals process for employees who feel they have been unfairly selected. This can reduce the chances of someone making a claim against you to an employment tribunal.
Employers should explain in the redundancy plans how someone can appeal. It might be appropriate to meet with employees face-to-face to listen to their concerns or ask them to write a letter or email explaining why they do not agree with the decision.
Establishing which employee qualifies for what.
For employees with less than two years’ service, there is no entitlement to Statutory Redundancy Pay.
Redundancy payments are dependent on the length of service of each individual and the age at the time of the potential redundancy;
- 0.5 weeks’ pay for each full year of service – before they reach 22 years old.
- One week of pay for each full year of service – in between 22 years old and 41.
- 1.5 weeks of pay for each full year of service – when they surpass 41 years old.
In addition to Statutory Redundancy Pay, employees are also entitled to statutory notice payments as a minimum. Often employees work their notice but where they do not, a payment in lieu must be made. Individual contracts of employment may offer enhanced notice and so it is important to check this. Statutory notice is;
- A minimum of one week – for staff who have been employed between one month and two years.
- One week of notice for each year of employment – for those who have been employed at your company between two and 12 years.
- 12 weeks of notice – if a staff member has been employed for 12 or more years.
Finally, the employee is entitled to receive pay for any accrued but untaken holiday entitlement. It may be possible to allocate some of this entitlement during the notice period.
If an employer fails to adhere to the redundancy process, or the employee feels like their rights have been breached or ignored, they may decide to make a claim for unfair dismissal to the Employment Tribunal.
If the tribunal finds in the employee’s favour and that you have breached your duties, you may be ordered to pay compensation – otherwise known as a protective award.
How can Duncan & Toplis help?
Please be aware that the information above is a brief overview of some of the legal requirements involved and it is not a comprehensive guide.
The Duncan & Toplis HR Team can support you with pragmatic advice throughout this challenging period in a number of ways. We can:
- Help you establish whether there is a legitimate business reason for the proposed redundancies
- Identify any possible ways to avoid redundancies
- Advise on possible risk factors
- Assist in ‘pooling’ and the creation of appropriate selection criteria
- Provide process support and supporting documentation
- Make redundancy calculations and set out timescales
If you would like professional advice or support related to redundancies or the possibility of job losses, please contact our team.
The information contained within this article is intended for general purposes only. If you are concerned about your business moving forwards and would like to discuss this with one of our experienced HR support team members please get in touch.