Making Staff Redundant: 7 Things to Think About (4-7)
As many employers are forced to consider staff cutbacks due to financial difficulties caused by the pandemic, Richard Gvero has summarised seven points that an employer needs to consider when making staff redundant.
- Should you ask for volunteers?
- The pool for selection
- Selection criteria
- Applying the criteria
- Pregnancy and family leave
- Alternative work.
Last week’s article covered the first three points: Making Staff Redundant: 7 Things to Think About (1-3). This week, Richard talks about the four other key things to think about when making staff redundant.
One of the key aspects of a fair dismissal for redundancy is consultation. So much so that a lack of consultation may in itself be enough to render the dismissal unfair.
Consultation is not the same as negotiation. It is however a genuine dialogue about the best way forward. In large scale redundancies (20 or more dismissals over a 90 day period) there is a separate legal requirement for the employer to consult employee representatives but even when only one redundancy is being proposed the employer will be expected to consult the employees who are at risk of being dismissed.
For the consultation to be genuine, it must take place when the employer’s proposals are not yet finalised. There must be room for the employer to change its plans based on the response of employees and any alternative proposals they may have. Redundancy should not therefore be announced as a fait accompli. Rather the employer should provide employees with information about the proposed redundancies and invite them to submit their views on the proposals as a whole and also on the way in which the proposals apply to each of them personally. This often means an initial consultation meeting with the workforce as a single group to discuss the need for redundancies generally and the way in which selection will be undertaken. This is then followed by a second phase of consultation where employees discuss their particular position once the selection criteria have been applied.
An employer does not have to accept any alternatives put forward by an employee in the consultation process – but should give them genuine and open-minded consideration. The more the employer can show that it shifted its position in response to the consultation process, the easier it will be to show that the consultation was a genuine exercise.
Where fewer than 20 redundancies are being proposed there is no formal time period over which consultation should take place. Typically however, there would be a period of about two weeks during which discussions took place and the selection was made before employees would be given notice of dismissal for redundancy. This would of course vary with the number of employees in the pool for selection and any procedures the employer might have agreed with trade unions or other employee representatives.
5. Applying the criteria
When the selection criteria have been chosen and the affected employees identified, the employer must then go about the process of applying those criteria to identify the employees who are to be made redundant. That can be largely a paper exercise, with a manager scoring employees under each of the criteria to produce a selection matrix. Those employees who score the lowest will be provisionally selected for redundancy and will then be given an opportunity to comment on or challenge the way in which their scores have been arrived at – usually in a one-to-one interview.
There is an increasing trend for employers to use an interview with the employee to make the actual assessment of who should be made redundant. Essentially, affected employees are asked to apply for the remaining roles within the part of the business concerned and the employer runs what amounts inn effect to a recruitment exercise. While this approach is well established and is not unfair in itself, it should be approached with care. Performance in the interview should not be allowed to predominate over what the employer knows of the employee’s performance at work. An employee may struggle to articulate qualities that they have amply demonstrated in their work and it would be a mistake to make an employee redundant simply because they do not perform at their best when interviewed. Any interview should therefore be focussed clearly on the selection criteria that have been identified and the employer should make sure that the employee’s actual performance in the job is taken fully into account.
Employees who are selected for redundancy should be told why they were selected and how they were assessed against each of the criteria. They should also be given the opportunity to correct any errors in that assessment. This may involve a formal appeal against their selection, but this is far from being a universal practice and is not a legal requirement. Provided the employee has been consulted about the criteria being used and the employer can show that they have been fairly applied, then this will generally be sufficient.
6. Pregnancy and family leave
In any redundancy exercise it is crucial to ensure that pregnant women and those on maternity, adoption or shared parental leave are not placed at a disadvantage. There is, however, no law against making such employees redundant provided the redundancy is a genuine one and the pregnancy or taking of leave does not in any way influence the employer’s decision. Employers should also be careful that employees who have recently returned from such leave are not placed at any disadvantage in a redundancy selection exercise. Selection criteria based on recent performance in the role can be a particular problem here. The fact that the employee has not been at work must not lead to a less favourable assessment. It may also be problematic to assess an employee’s performance before she went on maternity leave as that may also have been affected by her pregnancy. The better approach is to take a wide view of the employee’s performance based on her overall career history.
Employees who are on family-based leave should also be consulted about forthcoming redundancies and it may be necessary to use one or more of their ‘keeping in touch days’ to attend consultation meetings. Employers should ensure that such employees are included in any related correspondence. If the employer is communicating with the workforce electronically then it will need to ensure that this can be easily accessed by the employee and will be seen at the same time as it is seen by other employees – or at least as soon afterwards as is reasonably possible. The selection process itself must then be carried out in a way that does not place an employee on maternity leave at any disadvantage. If the employer is interviewing employees as part of the selection process, then a different way will need to be found to assess any employee on maternity leave.
Finally, those on maternity adoption or shared parental leave are entitled to preferential treatment when it comes to the consideration of alternative work. If the employee is due to be made redundant, but the employer has a suitable alternative vacancy elsewhere in the organisation then the employee must be offered that vacancy. Note that the employer’s duty is to make the offer of alternative work. This is not just a duty to give the employee an opportunity to apply for it, nor to give the employee’s application fair consideration. If the vacancy is suitable for the employee, then the employer must offer it – even if better qualified or more suitable candidates are available.
7. Alternative work
Quite apart from the specific obligation to those on maternity, adoption or shared parental leave, a reasonable employer carrying out a redundancy exercise will consider whether there is any alternative work available for affected employees elsewhere in the organisation. Employers sometimes make the mistake of not discussing some alternative roles with employees because they believe they will not be interested. They may be lower paid or less senior roles than the one the employee currently has. On the whole, however, it is better to present all the possible alternatives to the employee and have a genuine discussion about which of them might be appropriate.
An employee who unreasonably refuses an offer of suitable alternative work is not entitled to a redundancy payment. But employers should not be too quick to assume that this applies when an employee does not accept the alternative work that they are offered. First of all the offer itself must be ‘suitable’. That involves looking at the terms and conditions of the new role and comparing them to those currently enjoyed by the employee. If the new role involves a significant pay cut, more unsociable hours or a need to relocate then it is unlikely to be regarded as a suitable alternative. The same is true if there would be a significant loss of status or seniority.
Even if the role itself is suitable, the employee’s refusal of it may be reasonable. Reasonableness in this context is judged from the employee’s point of view and the subjective reasons for them refusing the role are taken into account. These may include family commitments that prevent them working further away from home or reasons to do with the nature of the work. Provided the employee can explain why the new role was not right for them, a Tribunal is likely to be sympathetic to their claim for a redundancy payment.
If the employee accepts an offer of alternative work, it is often assumed that this acceptance will be subject to a four-week trial period. In fact this is only the case if the employee is given formal notice of dismissal and the alternative work begins after that notice has taken effect. In those circumstances the employee can resign at any time in the first four weeks of the new role and still claim a redundancy payment.
If, however, the employer and employee arrange for the alternative role to begin before the notice period expires or even before formal notice is given, then any trial period is simply a matter to be agreed between them. If the employee is not happy in the new role and resigns then it may be that there is no dismissal at all – much less a dismissal for redundancy – and that there is no redundancy payment owing. To avoid disputes about an employee’s entitlement, the employer should clearly set out when making the offer of alternative work whether any trial period will apply and what will happen if either party is unhappy with the new role.
Read the first part of this article here: Making Staff Redundant: 7 Things to Think About (1-3)
If you need to discuss the possibility of making staff redundant, you can contact Richard Gvero for advice.
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.