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Redundancy Procedures

The definition of redundancy for employment law purposes is contained at Section 139 of the Employment Rights Act 1996 and this says:

139 – (1) for the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to-

(a)      the fact that his employer has ceased or intends to cease-

(i)  to carry on the business for the purposes of which the employee was employed by him; or

(ii)  to carry on that business in the place where the employee was so employed; or

(b)      the fact that the requirement of that business-

(i) for employees to carry out work of a particular kind; or

(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer, have ceased or diminished or are expected to cease or diminish.

 

A dismissal by reason of redundancy must be because the work that this particular employee does has ceased or is expected to cease or diminish.  For example, if it has been decided to reduce team leaders in a call centre from 15 to 10 because the Company believes that there is less work to do because the call volume has decreased, the staff levels need to also decrease.  The need for employees to carry out that particular work has diminished:  this is a redundancy situation.

 

It is important to note that the Employment Tribunal is not there to decide if the business is right when it decides it can do without 5 team leaders.  A Tribunal will not go behind this assessment if the business can show that it reasonably believes the work can be done by 5 less employees.  Otherwise, then there must be a closure of the branch so that the place where that work is carried out has closed or is expected to close.  This does not mean the whole building has to close:  it is sufficient that the department is moved, or closes in one building and no alternative positions are available elsewhere within the business.  The employer has to show that one of the above applies before there is a genuine redundancy situation.  This can occur for various reasons which are usually under one of the following headings (called the ETO reasons).

 

Economic reasons – the business is losing money;

Technical reasons – the business has invested in new equipment so there is less need of workers operating these particular more efficient machines;

Organisational reasons – the business has decided to close a branch.

 

If the employer can show that it has satisfied any one of the criteria then there is a genuine redundancy situation.  The area the Tribunal will look at is if the employer decides to simply re-label the job title, when there is no overall loss of jobs in the head count.

 

If you are in the situation where your employer has made you apply for your old job and they have simply changed the job specification, you should seek expert advice.

 

Once a redundancy situation is established the employer has to determine if the position(s) that are at risk of redundancy are unique or similar or parallel to other roles.  If they are very similar then the employer should create a pool of employees who are at risk of redundancy on the basis that the employees can do each others jobs.  If the position is unique to the particular role, then the employer does not have to create a pool for selection for redundancy.  The test a Tribunal will adopt is what would a reasonable employer would do, not what the Tribunal may do.  So, if an employer could reasonably conclude there is no need for a pool to be created for those at risk of redundancy, there is no need for a selection process to occur.

 

There are often cases in the Tribunal where this sort of dispute arises.  The Tribunal only looks at what a reasonable employer would conclude, so if one employer would create a pool, and another would not, then the one who chose not to may not have acted unreasonably.

 

The main problem area arises in relation to the process of redundancy and the fair selection of employees who are in a pool of employees at risk of redundancy.

 

Redundancy Procedure:  Duty to Consult

If 100 or more employees are likely to be made redundant at a particular establishment, then the employer has onerous duties to consult with the employees.  The steps that have to be taken in these circumstances include:

1. If consulting with the Union if there is a recognised Trade Union;
2. If there is no recognised Trade Union consulting with any forum that has already been elected by their colleagues.  If this does not exist, then the employer must ask the employees to elect some colleagues to act as worker representatives;
3. The employer must discuss in the collective consultation meetings the reasons for the redundancy, any alternative to the redundancy, alternative work and any method of selection they propose to adopt;
4. The employer also has to consult individually with affected employees, as well as collectively;
5. In this case consultation has to be over a 90 day period;
6. The employer must notify the Department for Industry on a form called an HR1 form which provides information to enable local government agencies to mobilise resources to assist in any mass redundancy situation.

 

If 20 or more employees are likely to be made redundant at one establishment, the employer has to take identical steps as with the 100 or more procedure, but the consultation period is 30 days.

 

Note: There are new rules scheduled to come into force on 6th April 2013, which will reduce the consultation period from 90 days to 45 days.

 

If there are less than 20 staff likely to be made redundant, then although the employer still has to consult with the staff, they do not have to negotiate with the Union or elected representatives, and it does not have to notify the government on an HR1 form.

 

The duty to consult is an absolute duty:  a failure to consult potentially renders any subsequent dismissal an unfair dismissal.

 

Failure to consult in collective redundancy situations involving 20 or more employees creates a separate potential claim against the employer for a protective award.  The Employment Tribunal can award up to 90 days pay if they find the employer has failed to consult in a collective redundancy situation.

 

The only defence the employee has for not consulting to avoid a finding of unfair dismissal being made is what is referred to as the “Polkey” case defence.  This case established that in a redundancy situation if the employer failed to consult, then it can still be a fair dismissal if it can be shown that the consultation process would have made no difference to the outcome.  It is fair to say that tribunals are critical of employers who have not consulted, and are generally not inclined to accept this defence if the employee can show that they had issues to argue, such as, possible alternative work or unfair selection for redundancy.

 

Selection Process in Redundancy Procedures

The basic principles in a redundancy selection process are, firstly, that any selection process must be conducted so that the employee can put forward any points, before the decision is taken.  The decision to proceed with a redundancy dismissal should not be taken until after the selection process and consultation process has concluded.

 

The selection process adopted must be mainly objective.  This means it should not be based on personal opinion, and should ideally be backed up with some quantifiable evidence.

 

The main method of selection adopted by employers is now based on a scoring criteria based on scores against different categories or criteria.  Problems can arise when the scores are not fair, or are based on unreliable or inaccurate information.

 

Further issues arise if the criteria themselves are too subjective.

 

If an employee considers that they have been unfairly scored they can lodge a claim for unfair dismissal on this basis (provided they have at least 1 year’s service).  They should lodge the claim within 3 months of the date of the termination of contract.

 

Capability Dismissals (employees with over 1 year’s service) Who

started thier employment before 6th April 2012 - and employees

with over 2 years service, who started their employment on or after

6th April 2012.

 

Capability relates to the ability to do the job you are employed to do.

If you are unable to work at all because of ill health and you are not able to return to work, then the employer would argue that you are no longer capable of working.

The other type of capability relates to not being able to perform to a reasonable and satisfactory standard. In this case you are not deliberately under performing but your employer has come to the conclusion that you may not be capable of doing your job.

 

In the first example a reasonable employer would obtain a medical report from the employees’ doctor. If the report said that the employee was not able to return to work because of ill health then a meeting should take place with the employee and the employer to discuss the report.

The employee should be invited to the meeting in writing and have the right to be accompanied at the meeting by a work colleague or a trade union representative. If a decision is taken to dismiss the employee this should be confirmed in writing and the employee should be given a right of appeal.

 

Difficulties in this area arise when the medical information is not so clear or the employee is capable of doing alternative work. We would advise that if you consider that you should not have been dismissed because of long term ill health then you should obtain legal advice about this.

 

In the poor performance situation

 

The employee should be advised of what the problem is and be given a chance to improve. The employer should be satisfied that the employee has been trained sufficiently and understands exactly what is required of them.

 

If the situation does not improve then the employee would be invited to a performance meeting and be given details in advance of the issues to be discussed.  They would also be given the right to be accompanied by a work colleague or a Trade Union Representative.  During the meeting the employer should put the issues to the employee and they would get an opportunity to respond.  The employer if they are not satisfied with the explanation can then issue a warning. Once the warnings procedure is exhausted if the employee is still not performing to the required standard then the employee can be dismissed.

 

In conclusion, if you are going through these processes give us a call and we will discuss all the issues with you, remember its free initial advice so if you are worried call 0800 783 7855.