An ACAS online survey of more than 2,000 British businesses during September 2020 asked about the likelihood of their organisations making redundancies between September and December. Over a third of businesses (37%) thought it likely. More surprisingly almost a quarter of businesses stated that they were unaware of their legal obligations to consult with affected staff before making them redundant. This unawareness increased to 67% amongst small businesses employing less than 50 employees.
Handling redundancy dismissals
Handling redundancies can be daunting for employers but its critical to be aware of your legal obligations to avoid costly claims and disputes. Even if a dismissal is genuinely on grounds of redundancy, whether it is fair to dismiss for that reason normally depends on the application of the general test of fairness laid out within section 98(4) of the Employment Rights Act 1996. This general test requires an employer to have acted reasonably in all circumstances in dismissing an employee but what does this actually mean in practice?
Required steps for a fair redundancy
You first need to work out how many redundancies need to be made and think about ways of avoiding them. If more than 20 employees are being made redundant from the same establishment you need to start consulting with your recognised union (if relevant) or start an election process for employee representatives. You then need to identify an appropriate pool for selection and choose your selection criteria.
You are now ready to write to affected employees or in a collective process, the employee representatives to inform them when the first consultation meeting will take place. This is your opportunity to explain the whole process including the reasons for making redundancies, how the redundancy pool has been identified and the proposed selection criteria to be used.
You have the option of offering voluntary redundancies, which would require you to explain any enhanced terms that would apply if an employee’s application for voluntary redundancy is successful.
Hold your first individual consultation meeting with each affected employee. Tell them the reasons again for making redundancies and allow them to comment on any selection criteria being used. It is important at this stage to listen carefully to any suggestions made by the employee about how to avoid redundancy. If collective consultation applies ensure that this is completed with any Union or employee representatives.
Complete individual scoring using the selection criteria and send each employee a copy of their scores. You do not need to send them the scores of other employees, but you should tell them the break point, which is the score they need to avoid being made redundant.
Hold your second individual consultation meeting with all employees who fall below the break point. This is the employee’s chance to challenge their scores and to explain why they think you have underscored them. If you agree with them then you should adjust their scores. This may have the effect of moving them above the break point and pushing another employee below it. You would be required to hold a second consultation meeting with the employee now pushed below the break point to allow them to comment on their scores. If you do not agree with their arguments about underscoring you should make a note of what they say and your reasons for rejecting them.
At the second consultation meeting it is important to explore and discuss alternative employment. This would involve looking for any suitable alternatives or allowing them to be considered for any particular role.
Hold a third and final consultation meeting and provided no alternative employment has been identified, confirm their redundancy selection and give them notice. If suitable alternative employment has been found offer it to them. If you require them to work their notice, then you should continue to look for alternative employment up to the date their notice expires. If they have been given a payment in lieu of notice, then there is no requirement to look for alternatives as their employment has terminated. If you have not already done so, you should explain how their redundancy payment and any other payments have been calculated. If they are working their notice period, you may be able to ask them to take all outstanding holiday. Finally, inform them of their right of appeal if you offer one. Appeals are not required and can often be difficult to handle after notice of dismissal has been given.
A note of all consultation meetings should be made and sent to the employee before moving on to the next stage of consultation. It is also best practice to allow the employee to be accompanied by a colleague or trade union representative to any dismissal meeting, although this is not legally required.
For advice or further information on complying with your redundancy obligations, call Henry Doswell of Doswell Law Solicitors on 01233 722942. Alternatively, email Henry at email@example.com
Disclaimer: Whilst every reasonable effort is made to make the information and commentary contained in this blog accurate and up to date, Henry Doswell takes no responsibility for its accuracy and correctness, or for any consequences of relying on it. The information and commentary in this blog does not constitute legal advice to any person on a specific case or matter. You are strongly advised to obtain specific, personal advice from a lawyer about your case or matter.