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Redundancy dos and don’ts
03 December 2008
One quarter of UK employers have drawn up plans to make
redundancies over the next 12 months, according to research by the
Chartered Institute of Personnel and Development (CIPD) and
management consultancy KPMG. With unemployment levels reaching a
seven year high it should come as little surprise to read
that businesses of all shapes and sizes are increasingly seeking
advice on redundancy law. The Forum of Private Business (FPB) has
said that 12% of calls to its legal advice helpline regarding
employment issues related to redundancy.
Redundancy law has moved on considerably since the last economic
downturn and you will expose your business to expensive claims of
unfair dismissal and discrimination if you do not follow current
law and practice.
The compulsory dispute resolution regulations generally apply to
all dismissals including redundancies, except where the rules on
collective redundancies apply. If you do not follow the
minimum 3 step dismissal procedure the redundancy will therefore be
automatically unfair, where an employee has the requisite service,
and compensation can be increased by up to 50 per cent.
In brief the compulsory dismissal procedure requires:
Step 1 - The employer to write to the employee stating the
grounds for their proposed redundancy and to invite them to attend
a meeting to discuss the situation before a final decision is
taken.
Step 2 - Meeting.
Step 3 - Appeal.
Whenever a redundancy is proposed meaningful consultation must
take place, and should be capable of being shown to have taken
place, in order to avoid a negative outcome at the Employment
Tribunals. Two or more meetings will normally be required to
allow for meaningful consultation. The meetings should also
be used to explore the possibility of alternative employment which
is another crucial element that is required to achieve a fair
redundancy.
Employees have the right to make a reasonable request to be
accompanied by another employee or a trade union official of their
choice at the meetings. Companions do not have the right to
answer questions put to the employee but can otherwise take an
active role during a meeting. Compensation can be awarded
where the right is infringed.
In addition to complying with the compulsory dispute resolution
procedures an employer must be able to show that it acted
reasonably in all the circumstances (including its size and
administrative resources). Fair and objective criterion and a
consistent approach are key factors. A paper trail that
confirms what an employer did is normally crucial to defending a
claim.
Where an employee is selected as being potentially redundant,
subject to consultation, after the employer has applied its
objective criterion to the pool of staff that were at risk,
difficult questions often arise about how much information should
be disclosed to the employee to explain their
selection.
Based on recent case decisions my advice in such situations
is:
- Enclose details of the individual’s own scores with the Step 1
letter
- Enclose a schedule of the other pool employees’ total scores
but on an anonymised basis with the Step 1 letter.
This is slightly more cautious than the cases suggest but should
provide you with substantial protection and has the benefit of
allowing for any scoring mistakes to be picked up during the
consultation stage rather than at the Employment Tribunals.
The legal landscape looks set to change on 6 April 2009.
The compulsory dispute resolution regulations will probably be
abolished that day and be replaced by a new Acas Code of
Practice. The draft Acas Code of Practice applies to
disciplinary and grievance procedures only and redundancy and fixed
term contracts are stated as being beyond its scope. The
extent to which Employment Tribunals apply the principles in the
current procedures to redundancies from 6 April 2009 remains to be
seen but is likely to be significant.
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