15th August 2008

INFORMATION
UPDATE

 Issue No.  2008/19

 Sentient
              

 

 PROBLEMS WITH REDUNDANCY?

 
Managing redundancies is a difficult process even for those with experience.  When businesses are under pressure to cut costs or are responding to reducing work load there is an inevitable focus on employee numbers and should they be reduced.
 
If the business is under pressure and is seeking to bolster its ability to survive more difficult times then it will need the commitment and loyalty of its workforce.  If jobs have to be reduced through redundancy then maintaining staff morale is made even harder.
 
If your organisation is in this situation then how it approaches job loss will be a key factor in securing long term viability.
 
Factors to consider are:
 
  • Timescales – how fast does the employer need to act to ensure future viability
  • Employee reaction – you need employees fully behind the business in order to succeed and maybe even just to survive
  • Legal requirements – the law sets out a number of key rights and obligations that apply to dismissals in general and redundancy dismissals in particular
  • What happens if redundancies are actioned outside the legally required process?
 
Some key legal requirements:
 
  • It must be a genuine redundancy i.e. meets the legal definition of redundancy and not just another way of getting rid of a bad performer.
  • Suitable and appropriate consultation must be carried out.  Not just with employees in jobs that are at risk but also with those employees who will remain but are affected by the change.
  • The law sets out criteria that determines if consultation is required by statute and if so how this should include elected representatives.  If not required by law (depends on the numbers involved) then those at risk are still entitled to consultation on an individual basis.
  • Consideration of alternatives and volunteers.  Where vacancies exist in other parts of the organisation it will be essential to consider them during consultation as possible opportunities for re-deployment.  Requirements to allow trial periods and ‘suitability’ are key.
  • If compulsory selection is required then it is essential that a fair and objective approach is taken.  Many different criteria have been used to select for redundancy and the best advice is to use those that can be evidenced by measurable factual data.
  • Severance pay in the form of Redundancy Pay is again prescribed by law. This has changed in recent times due to the impact of Age Discrimination legislation but a statutory scale of payments remains based on age, service and rate of pay as at the effective date of termination.
  • Contractual consideration must also be taken to ensure any relevant terms in the contract of employment are applied e.g. enhanced pay, notice periods etc.
  • A fair process of dismissal will be required that at least follows the statutory minimum requirements that currently apply (these are anticipated to change in 2009).
  • Notification to the Secretary of State is required if 20 or more jobs are proposed as redundant.
  • Time off to look for work or arrange training.
 
The above points illustrate the complexities of this area – we could (and have) written much more comprehensive guidance on this subject and clients are reminded to use the advice line and the back up documents available to you in the Employment Guidance Manual and website “members area”.
 
Failing to get it right in any of those areas could lead you into an unfair dismissal at Employment Tribunal.
 
We are running seminars on ‘Managing Redundancy’ as follows:
  • 16th October in Bradford
  • 23rd October in Leeds
  • 30th October in York
Time: 9.30am – 12.30pm
Cost £125.00 plus VAT per attendee
 
Please click here for further information.
 
Finally if you are considering changes in your business that could lead to job loss then early advice is recommended.
 
For a private and confidential discussion please call us on 08456 446006 or email advice@sentientuk.co.uk

 

 

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