Redundancy and restructure situations are difficult for both employer and employee. Redundancy is the typical “no-fault” dismissal situation – but that doesn’t make it feel any nicer for anybody involved. Few of us enjoy change. Nobody likes being advised that their role is no longer required.
There is no perfect way or one-size fits all approach to a redundancy or re-structuring situation – but what are the traps to avoid for employers?
Pooling – Employers have a relatively wide discretion when it comes to pooling. Don’t fall into the trap of extending a pool just so that it feels “fair” to employees at risk (or so that they have someone that they are compared to). If they should genuinely be in a pool of one, make it a pool of one. Conversely – don’t leave the axe to fall on a particular employee if they realistically do the same role in the same location as other employees. Don’t be deceived by job titles – in a law firm most people are labelled as “solicitors” or “partners” – but a conveyancing solicitor is very different to a corporate solicitor. As a rule of thumb – pooling is appropriate where employees have roles in the same location – that are pretty much interchangeable.
Volunteers – Don’t turn down a voluntary redundancy from an employee in the pool, unless there are very good business reasons why it can’t be accepted. Given that redundancy is a “no-fault” dismissal – theoretically any employee in the pool could go – and if someone volunteers – then that volunteer should normally be accepted. Volunteers from outside of the pool may not avoid the redundancy situation within the pool (if you have too many people in sales, someone in finance offering to leave is unlikely to prevent the sales redundancy).
Consultation – Don’t enter into it with a “closed mind”. Genuinely – redundancy situations can be avoided through effective consultation. Alternatives – often involving job shares, and reduced hours can prevent compulsory redundancies. These can only be achieved through effective consultation. Also – consultation is a great opportunity to properly test the fairness of any proposal. So – consider alternative pools, other changes (etc) – in doing so, it can prevent unfair dismissal claims or assist in defending them by showing that alternatives were genuinely considered.
Fixed-Term Employees – Don’t opt not to extend the contracts of your fixed-term employees rather than pooling all relevant employees. It could be discriminatory to do so. Whilst the expiry and non-renewal of a fixed-term contract is not a detriment on the grounds of being fixed term – the non-renewal of a fixed-term contract is a “dismissal” in law. Therefore, employees engaged on fixed-term employment contracts will have ordinary unfair dismissal rights after two years’ continuous service.
Procedure – Don’t ignore your redundancy procedure. A tribunal will look dimly (by which, we mean they will probably find it unfair) if you do not follow the terms of your own redundancy procedure. A failure to follow a contractual redundancy procedure would also be a breach of contract (as well as an unfair dismissal).
Please be mindful that anyone aged 55 or over who is made redundant or who’s fixed term contract is terminated, is automatically entitled to access their pension (if they’ve contributed) at an un-reduced rate, ie the employer may need to top up the employees’ pension pot and this can be a significant financial amount. It may not be financially viable to make the post redundant! Ensure you seek HR advice throughout the process but particularly once a pension estimate has been requested.
With hindsight – it is easy to criticise the approach that an employer has taken, and employers are afforded a relatively wide latitude by tribunals in terms of pooling and the range of reasonable responses. It is sensible to take advice before embarking on a redundancy or restructuring process to avoid some of the more common traps. Make sure you speak to your HR Consultant or give one of our team a call on 01924 827869. We have extensive experience of dealing with restructures across all levels of education and will work with you to achieve your objectives in the best way possible.
