The pandemic has meant many businesses have been forced to make some difficult choices.
Among the toughest are those that involve redundancy. Making a mistake can be costly – compensation for a standard unfair dismissal can be up to £88,519.00 – and if discrimination is involved, such as disability or sex, then this £88,519 limit is removed.
Here, Michael Shroot looks at five key redundancy mistakes businesses are making and how they can be avoided to ensure staff are treated fairly.
1. Assuming that using redundancy as a reason for dismissal is correct
There is often a failure to understand that there is a specific, statutory definition of redundancy. In summary, an employee can be made redundant if an employer is closing the business, closing a workplace where the staff member was employed, or if there is a reduced requirement for employees.
If a business has a poor performing employee, they should be dismissed under a capability procedure – especially if someone else may be employed in their place. If a tribunal found that the reason for dismissal is not as put forward by the employer, there is a risk of the dismissal being found to be unfair.
2. Not understanding the collective consulting rules
An employer has a duty to undertake proper consultation – particularly if they intend to make 20 or more people redundant in a period of 90 days or less.
In that scenario, an employer must inform and consult appropriate employee representatives. Where 100 or more redundancies are proposed, consultation must begin at least 45 days before the first dismissal. For less than 100 redundancies, the period is 30 days.
Where there is a breach of this information and consultation duty, a tribunal may award up to 90 days’ pay in respect of each employee. The Secretary of State must be notified at least 45 days before the first dismissal (or within 30 days for less than 100 redundancies). Failure to do so can lead to a fine.
3. Not treating individuals fairly
Whether there is a collective consultancy or not, an employer must ensure it has followed a fair procedure in relation to individuals.
Employees should be given adequate information on which to respond (e.g. the basis for their selection) and time to respond and even challenge their selection and explain any factors their employer may not have been aware of. A redundancy dismissal will not usually be fair unless an employee has been properly warned and consulted.
4. Not understanding selection criteria
Criteria should be both objective and capable of independent verification and avoid having a direct or indirect discriminatory aspect – i.e. measurable and not based on personal opinion.
The usual criteria are performance and ability; length of service; attendance records and disciplinary records. Selection on purely subjective grounds such as ‘attitude’ is likely to be unfair.
5. Giving no consideration to alternative employment within an organisation
Dismissal is likely to be unfair if the employer gives no consideration to whether suitable alternative employment existed within its organisation, and in some circumstances within a group of companies.
The employer also has to provide the employee with sufficient information about any vacancies so they are able to take an informed view as to whether the position is suitable for them.
Further, employers should remember that if any of its potentially redundant employees are on maternity (or adoption or shared parental) leave, they have an automatic right to be offered any suitable vacancies. It is expected that the government will be extending this to cover employees as soon as they notify their employer of their pregnancy, and until six months after the end of maternity leave.
An employer can also take advantage of offering alternative employment for a trial period.
For further advice on this or any other employment law matter, call Michael Shroot on 0161 761 4611 or email him at michael.shroot@whnsolicitors.co.uk
