Category Archives: Redundancy

Common Employment Myths

Perception v Reality

SUMMARY: Employers have a number of misconceptions about their rights in relation to employees. Read this if you want to know five common reasons employees may bring a claim against their employer when these misconceptions have been held.

Retirement

“I can retire someone when they reach 65”.

This is not the case. Retirement is no longer a fair reason for dismissal and an employer cannot force someone to retire unless it can be objectively justified (employers should seek legal advice if they think that a retirement may be objectively justified). If it cannot be justified, dismissal will be unfair and discriminatory on the grounds of age.

If an employee’s performance is not satisfactory, an employer should go through a performance management process in the normal way. If there are questions to be asked relating to workforce planning, consider incorporating discussions about an employee’s future plans, which would include retirement, into the appraisal system. However, only ask open questions about short, medium and long term goals and not direct questions about retirement. All employees irrespective of their age should be asked these questions.

All employees, irrespective of their age, should be treated consistently, otherwise there is a risk of age discrimination claims in an employment tribunal.

Probationary period

“I don’t need to give anyone an employment contract now, I’ll give it to them when they’ve done a trial”.

Employees should be issued with contracts when (or preferably before) they start employment. Employers should not wait until the “trial” period or any probationary period has expired. If certain key terms and conditions are not provided to them within two months of commencing employment, the employer could be liable to pay additional compensation to them if they bring a claim in an employment tribunal.

Employers should also be aware of the commercial risk. A retained employee could, at some point in the future, argue that they are not bound by the terms and conditions given to them after they have started. This could be an issue particularly if reliance on confidentiality provisions and post terminations restrictions is an important consideration for the employer.

Interviews and record keeping

“When I interview people, I just have a chat with them to see whether I like them or not. I don’t need to do anything more formal than that.”

An employer does not need to have an elaborate assessment regime set up to employ people. It is legitimate to have a short interview, but it is vital to have considered before-hand the skills, experience and personal attributes necessary for the job (which should have been done when creating the job description/person specification). Interview questions should focus on establishing whether the prospective employee meets the criteria for the job; similar questions should be asked of all candidates.

A record should be retained of the questions and candidates’ answers as well as the reason for selecting the successful candidate. Employers should be aware that unsuccessful candidates could make a data subject access request to obtain copies of these documents, particularly if they are unhappy with the decision. Managers when making their notes should be mindful not to incorporate opinions, which could cause embarrassment at a later date or could be used as evidence in an employment tribunal claim for discrimination.

Individuals do not have to be employed in order to bring a claim in an employment tribunal. A prospective employee who believes they have been discriminated against during the selection/recruitment process may bring a claim; any notes an employer has retained of the interview would be essential in the defence of such a claim.

Pregnancy

“She was pregnant at the interview and didn’t tell me. She’s not getting maternity leave – I’ll dismiss her.”

An employee has no obligation to tell a prospective employer that she is pregnant at the interview and the prospective employer should not ask this question because they would risk a sex/pregnancy/maternity discrimination claim. An employer cannot dismiss on these grounds as this would also be discriminatory. Compensation for discrimination in the employment tribunal is unlimited.

Employers should remember that all female employees, no matter how short a time they have been employed, are entitled to take maternity leave of up to 52 weeks and retain the right to return to a suitable job.

Outsourcing

We are going to outsource the cleaning to a cleaning company. We won’t need the cleaners we employ anymore so we will make them redundant.”

If an organisation has an outsourcing situation, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) may apply. This means that in some cases the organisation’s cleaners will automatically transfer on their current terms and conditions to the newly appointed cleaning company if this work is outsourced. If employees are dismissed because there will be an outsourcing, the employer could be in breach of TUPE and the employees could bring a claim for automatic unfair dismissal in the employment tribunal.

If an outsourcing is being considered, employers should seek early advice on whether TUPE may apply. If it does apply, an employer has information and consultation obligations to fulfil before the outsourcing takes place. Non-compliance could lead to an employer being ordered by a tribunal to pay up to 13 weeks’ gross pay per employee.

Contact details

If you would like advice on any of the issues raised in this article, please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice. 

Making Redundancies – Key Principles

Redundancy Policies

SUMMARY: HSBC has announced it is cutting 8,000 UK jobs in a global reorganisation.  There is no doubt that planning has been undertaken for such large scale redundancies, but what are the key steps that any business should take when making redundancies?

HSBC recently announced that as part of a global reorganisation, it will axe 8,000 jobs in the UK.  Many businesses will have to make redundancies at some point, whether it is part of a reorganisation or a site or workplace closure.  What are the key steps an employer should take when making redundancies?

  1. Ascertain the current situation – conduct an audit

Before taking any decision about embarking upon redundancy consultation, an employer needs to understand its current structure and terms and conditions of employment by conducting an audit.  In particular, it should consider the following:

a)    Does it have an up to date organisation chart?

b)    Does it have up to date contracts of employment for all employees?

c)    Are all employees’ job descriptions up to date?

d)    What are the terms of the contracts of employment?  In particular, what notice period are employees entitled to receive from the employer?

e)    What length of service do employees have?  Employees with less than 2 years’ service are not entitled to a statutory redundancy payment and generally do not have a right to bring a claim for unfair dismissal.

f)    What age are employees?  This is relevant for calculating any statutory redundancy payments.

g)    Is there a collective agreement with a trade union and does it include provisions relating to redundancy?

h)    Check policies and procedures are up to date and particularly consider whether there is any policy on the process for redundancy consultation and how much employees may be paid when they are made redundant.  There may be an enhanced redundancy pay scheme, which entitles employees to be paid more than statutory redundancy pay.

  1. Consider the reasons for making redundancies

The employer must have a strong rationale for making redundancies and it is sensible to set this out in writing in the form of a proposal.  The reasons must relate to:

a)    business closure (closure of the business altogether);

b)    workplace closure (closure of one of several sites, or relocation to a new site); or

c)    diminished requirements of the business for employees to do work of a particular kind (this is generally the reason for a restructure).

It is usually easy for an employer to demonstrate the first two reasons, but the third reason may require some further exploration and gathering of information to support it.

  1. Identify the pool for selection

A pool is the group of employees from which an employer will select those who are to be made redundant.

Before selecting an employee or employees for dismissal on grounds of redundancy, an employer must consider what the appropriate pool should be. Where the employer recognises a union, it will usually be expected to discuss the choice of pool with the union. A pool can be made up of one person in some cases.

Carefully identifying the pool for selection is likely to be most important in cases where there are diminished requirements for employees to do work of a particular kind.

If an employer is unsure what an appropriate pool for selection would be, we can assist in identifying this.

  1. Consultation

There are two types of consultation; collective and individual.  Individual consultation must always be carried out, even if collective consultation is carried out. Collective consultation obligations (in particular the length of the consultation period) depend on the number of individuals to be made redundant.

In the case of HSBC, it is likely that it will need to carry out collective consultation which must be carried out if an employer proposes to make redundancies of 20 or more employees within a period of 90 days or less.  This is one of the reasons it is key for an employer to establish how many redundancies it is proposing to make before starting consultation.

Although there are various steps an employer will need to follow when carrying out consultation, one essential criterion, whatever the type of consultation, is that an employer can show that the consultation is meaningful.

Minimum areas consultation should cover

In all redundancy situations, consultation should cover as a minimum the following areas:

a)    the reason for the proposed redundancies;

b)    the proposed pool for selection;

c)    the method of selection (eg. objective selection criteria); and

d)    ways of avoiding redundancies.

If consultation obligations are not satisfied, employers risk potentially expensive unfair dismissal claims being brought against them and/or a requirement to pay significant financial awards (known as protective awards) of up to 90 days’ gross pay per employee for failing to collectively consult.

Pre-consultation enquiries

Before starting consultation, we suggest an employer considers the following:

a)    The number of employees to be made redundant.

b)    Where those employees are based (i.e. are they at one site or different sites?)

c)    Whether there is a recognised trade union.

d)    Whether there is a collective agreement with a trade union containing obligations relating to collective consultation.

e)    Whether there is a need to elect employee representatives (which may be necessary to satisfy collective consultation obligations).

f)    What the timeframe is likely to be for the consultation period prior to making redundancies.

We suggest that employers seek legal advice if they intend to dismiss by reason of redundancy, so that an appropriate process can be followed to avoid a claim of unfair dismissal and/or a claim for a protective award.  Our advice will be most effective if an employer has already carried out the suggested steps in “ascertain the current position” above; we can assist an employer in carrying out these steps and conduct an audit of existing documents.

Contact Details

For more details about how to carry out redundancies please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice.

Managing Redundancies Effectively

 In today’s economic climate redundancy is likely to be an unavoidable consideration for employers.

Planning and executing a successful redundancy exercise is essential if claims of unfair dismissal and discrimination are to be avoided. Our practical seminar will consider:

  • What is redundancy
  • Alternatives to redundancy
  • Creating an effective framework for managing redundancies
  • Consultation obligations – collective and individual
  • Selection of individuals
  • Payments outside the statutory requirements
  • Common mistakes
  • Dismissing with minimal risk and avoiding claims

To reserve your place at our ‘Managing Redundancies Effectively’ seminar e-mail info@floydgraham.co.uk or call us on 01604 871143.