redundancy
Andrew Dane

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Redundancies; how, and how not to be fair

REDUNDANT; the Dictionary describes this as meaning; not or no longer needed or useful, superflous.

Some employers and employees alike have the misconception that it is the individual who is being made redundant when in fact it is the job or the work that the employee is performing that is redundant.

It is not uncommon for companies to dismiss an employee for redundancy when in reality they are dismissing them for some other substantial reason. This can lead to an employee receiving an award at the Employment Tribunal for unfair dismissal in addition to their redundancy payment.

A number of high profile companies in the management consultancy, banking and telecommunications sectors are reportedly to have informed their staff of impending redundancies either by pre-recorded voicemails or text messages. Being told by your boss {or, in some cases, the HR department} that your job is to be made redundant is rarely amusing but to be informed in such a callous manner and immediately despatched, is demoralising and degrading, not only for those staff affected by the redundancies but also the company survivors. In some cases this behaviour has had a profound effect on the ‘bottom line’. So logical thinking is that it is good business practice to follow the procedures and treat redundant staff, and the survivors, with the dignity and respect that they rightly deserve. If badly handled, just think of the potential adverse publicity the business could suffer, not only at the hands of disgruntled ex-employees via social networks but also shareholders and the general public? Or alternatively; if handled properly and with sensitivity, the great credit that the dismissing organisation could potentially receive?

Redundancy will only be a fair reason for dismissal and beat an unfair dismissal claim if the reason for the redundancy is a genuine one. In other words meets the following definition and is fair in all the circumstances:-

  1. The definition of redundancy is described in the Employment Rights Act 1996 {ERA} which states that an employee is dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to; The fact that his or her employer has ceased or intends to cease to carry on the business for the purposes of which the employee was employed by him, or has ceased, or intends to cease, to carry on the business in the place where the employee was employed.
  2. The fact that the requirements of that business for employers to carry out work of a particular kind in the place where the employee was employed, have ceased or diminished, or are expected to cease or diminish.The legal definition can therefore be split into three potential redundancy situations:-
  • closure of the business
  • closure of the employees workplace
  • a diminishing need for employees to do work of a particular kind

The common errors which may lead to complaints by the employees, include:-

  • dismissing the employee where there is not a redundancy situation at all
  • selecting employees by use of subjective rather than objective criteria
  • failing to follow a fair procedure
  • selecting employees for dismissal at too early a stage in the process;
  • selecting an employee for an automatically unfair reason

PROCEDURE

The most important thing to emphasise is that procedure is crucial to handling a fair redundancy. Part of the procedure is; notifying the appropriate authority, inviting volunteers, considering alternative employment and individual and collective consultation.

ACAS CODE OF PRACTICE

Companies are required to adhere to he Acas Code when dismissing staff. However, the Code of Practice will specifically not apply to redundancy situations.

ESTABLISHING FAIR SELECTION

One of the most important stages in the selection procedure is setting out the criteria used to determine which members of staff are to be selected for redundancy. These criteria must be objective and precisely defined. The main purpose of such criteria is to ensure that staff are not unfairly selected. The criteria must be established in consultation with a Trade Union or staff representative and should be applied if other methods such as voluntary redundancies, have not produced suitable volunteers.

EXAMPLES OF OBJECTIVE CRITERIA

attendance or disciplinary record {but not the sole criteria}
skills, experience or capability
performance or skills rating and qualifications
the standard of work performed, aptitude for work

However, there must be some objective evidence to support selection on this basis, and whatever criteria are used, they must be applied consistently to all employees affected.

Although selection based on ‘last in first out’ {LIFO} has obtained almost celebrity status as an objective criteria, selection based on LIFO is no longer appropriate.

AUTOMATICALLY UNFAIR REASONS

There are a number of selection reasons that are considered to be automatically unfair for redundancy dismissals and will lead to an unfair dismissal. These include criteria based on:-

  • maternity related grounds
  • participation in Trade Union activities or non-membership of a Trade Union
  • carrying out duties as an employee representative for consultation on redundancies or business transfers
  • taking action as a recognised or designated Health & Safety representative.
  • asserting a statutory employment right
  • a reason relating to rights under the Working Time Regulations 1998
  • exercising or seeking to exercise the right to be accompanied at disciplinary or grievance hearing
  • requesting flexible working arrangements

The above list is not exhaustive, nor is it intended to be. It seeks to emphasise the procedures which must be followed if companies are seeking to make redundancies.

If your company is contemplating declaring redundancies, then in strictest confidence, please contact me.

I have a verifiable and succcessful track record in recently guiding and overseeing several company redundancy exercises. Without attracting any of the problems normally associated with redundancy.

Whilst great care has been taken in writing these notes, please be advised that they are not to be considered a substitute for specific professional advice.

It would be greatly appreciated if you were to let me have your observations on the above. So please feel free to leave any comments below:-

For more information about my services, please visit www.thebusiness-medic.co.uk

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