However, as labour demands have now slowed, redundancies have increased. And with the continuing challenges associated with rising costs, many employers may find themselves planning redundancies, some for the first time.
Employers have certain obligations when considering redundancy, whether it relates to a standalone position or a group. Redundancy dismissal can give rise to successful unfair dismissal claims if not managed correctly. Here’s a quick guide to ensure a fair and compliant redundancy process.
Managing redundancy
If 20 or more redundancies at one establishment are contemplated within a 90-day period, the employer has extra obligations to carry out collective consultation before taking any action. This needs to take place with a recognised trade union or with employee representatives elected by the affected employees.
Such consultation should involve a genuine attempt to avoid the redundancies or mitigate their impact and must commence at least 30 days prior to any dismissals (45 days before where 99 or more redundancies are contemplated). The penalty for failing to comply is a protective award for each affected employee of up to 90 day’s pay.
For any redundancy, whether it’s just one or 1000, consultation must be carried out with every employee who is at risk, on an individual basis, to inform them of the reasons for redundancy, and to allow them to make any suggestions or proposals to avoid redundancy before the final decision is made. Furthermore, before confirming any dismissal, the employer must make reasonable efforts to identify alternative employment within the organisation.
Fair selection
Where the redundancies involve roles for which there is more than one job-holder, or roles which have responsibilities which are potentially interchangeable with other roles, the employer may need to define a ‘selection pool’ of individuals who are at risk of redundancy. It will then need to adopt a fair method of selecting those from that pool who are to be made redundant. Consideration may also need to be given to including subordinate roles where the roles are not too dissimilar in nature and remuneration (known as ‘bumping’).
The application of a fair and non-discriminatory redundancy selection process is an area in which employers commonly fall down. Employers use a robust selection matrix, consisting of several criteria which are consistently applied to each employee in the pool, and which are as objective as possible. Any measure which puts those with a particular protected characteristic (e.g., sex, age, disability) at a disadvantage can lead to an unlawful discrimination claim if not adjusted to remove such impact.
Redundancy and maternity
Situations involving the redundancy of employees who are pregnant or on maternity leave can be a complex area to navigate. It is not necessarily unfair to make an employee on maternity leave redundant but it is more tricky There are a number of special considerations that should be made for affected employees, to ensure they are not put to any disadvantage.
Employees returning from ordinary maternity leave (the first 6 months) have the right to return to their original job unless that job is no longer available. Employees on additional maternity leave (the second 6 months) have the right to return to the same job unless it’s not reasonably practicable for them to do so. In which case, they must be offered a suitable alternative role on terms which are no less favourable. Where an employee who is on or returning from maternity leave is at risk of redundancy, they have a right to be offered any suitable alternative employment, even if there are other candidates who may appear to be better-suited to or qualified for the role.
When to consider ‘bumping’
The dismissal of an employee whose job is still required but is given to an employee whose job is no longer required, mays still fall within the redundancy category. In such circumstances, it does not necessarily matter that the type of work for which there is a reduced requirement is not the work undertaken by the employee who is ultimately made redundant. This type of situation is commonly referred to as ‘bumping’, i.e. the potentially redundant employee ‘bumps’ another employee out and takes their place. This typically occurs when a supervisor or line manager is potentially at risk, but their subordinate’s role is not.
To bump or not to bump? There is no simple answer to this. However, it is important that employers give careful consideration and set out a reasonable justification to allow bumping. Factors to think about may include; would the ‘at risk’ employee perform the role as effectively, length of service, significant changes to terms and conditions such as pay or loss of benefits.
Alternative employment
Employers have a duty to make reasonable attempts to find alternative employment for anyone facing redundancy, and employees on maternity leave, adoption leave or shared parental leave have an additional right to be offered any suitable alternative role that exists, even if there are other candidates for the role (internal or external) who may be better suited or more qualified. From 6 April, changes come into effect which will extend this protection so that it covers those who have informed their employer that they are pregnant, and so it lasts for a period of 18 months from the date of the child’s birth (potentially up to 6 months after the employee has returned to work) rather than ending when the statutory leave period ends.
Where suitable alternative employment is identified for an employee who is at risk of redundancy the law provides for a trial period of 4 weeks during which both the employer and the employee can decide if the alternative role is suitable. If at the end of this period (which can be extended if both parties agree in writing) either party feels that the alternative role is unsuitable, then employment may still be terminated on the grounds of redundancy, with the employee retaining any statutory right to redundancy pay.
This has been a ‘whistle-stop tour’ of the complex issues with regards to redundancy. If your organisation is one of those that is anticipating the need to make redundancies, you can find an abundance of resources available for free download on our website, including factsheets on how to manage the process, how to deal with collective consultation and the special issues relating to pregnant employees. There is also a sample selection matrix and an individual consultation checklist template.
Alternatively, our team are on hand to provide further information to ensure your organisation adopts a compliant redundancy process. Contact us on 01942 727200 or email enquiries@employeemanagement.co.uk for a no obligation chat.