Making a redundancy dismissal fair
Definition of Redundancy
Redundancy is when an employer has a reduced requirement for employees of a particular kind at a particular place of work.
An employer does not have to show that there is a decrease in work or even a need to save money; redundancy is often the result of reduced work, but can also be a result of reorganisation, outsourcing work, or closure of a site.
What makes redundancy unique among the potentially fair reasons for dismissal is that it is the “job” that is being dispensed with, rather than the employee personally.
How dismissal for a genuine redundancy can be done fairly
In all redundancies a fair process means there must be a consultation period before a final decision is taken. An employee is entitled to notice from when the final decision is taken. The amount of notice an employee is entitled to is either what is written in their contract or one week for every year of their employment (up to 12 weeks), whichever is the longer.
The following steps must be followed by an employer to make a redundancy dismissal fair:-
1. Considering pool for selection
2. Warning
3. Consultation
4. Fair selection process
5. Offering vacancies
6. Appeal
1. Pool for Selection
An employer must first of all decide on a “pool” for selection. This means selecting a group of employees with reference to their jobs out of which the redundancies are to be made. There is no right or wrong answer to how wide the pool should be drawn as long as determining who should be included in the pool is by reference to the job or place of work, not the individual characteristics of the employees.
2. Warning
An employer has a duty to warn all employees who are likely to be affected as soon as a decision is made to propose redundancies. This unusually marks the beginning of the “consultation period.”
If an employer proposes to make 20 or more employees redundant from one site either at the same time or over a 3 month period, special procedures are required.
3. Consultation
The consultation period is a period of time during which all employees affected are entitled to have an input into the employer’s proposals. The employer is required to provide sufficient information for the consultation to be meaningful and consider any suggestions made by the employees.
The subject matter of the consultation can include:-
(a) Ways of avoiding compulsory redundancies
(b) The employer’s proposed method and process of selection
(c) Alternative employment/process for filling existing vacancies
Consultation is more than providing information, but does not necessarily amount to “negotiation” in the sense that the final decision following consultation is down to the employer so long as the employer has considered suggestions made by the employees and has reasons for the final decisions.
There is no set minimum time for the consultation period (30 days or 90 days only applies where there are 20 or more redundancies). However it would be difficult for an employer to justify a consultation period of much less than a week, especially if a selection exercise is to be undertaken.
4. Selection process
If the number of redundancies to be made is smaller than the number of employees in the pool for selection, a fair method of selection must be used.
A fair method of selection is one which is objective. An employer who simply chooses the employees to be kept on subjective grounds acts unfairly. The criteria used may be very simple (e.g. “last in first out”), or can involve a number of criteria and a scoring system. If a scoring system is used, the use of some categories which involve a degree of subjective assessment, may be valid as long as when looked as a whole the process is objective. In determining whether a process has been fair, a Tribunal must consider both the categories used and the process by which employees are assessed to see whether it is a genuinely objective way of selecting employees or whether it is just a cloak to mask the employer’s subjective selection.
Whether the criteria are all objective or partly subjective, the process of assessment must be objective and employees must therefore be given the opportunity to comment on their assessment before a final decision is made. This means they must be able to know how they scored in each category of the assessment. An employee is entitled to see their own assessment but not those of other employees.
5. Vacancies
An employer must offer redundant employees any suitable vacancies. There is a statutory 4 week trail period available so if there is doubt about an employee’s suitability for the job or if the employee doubts the suitability of the job for them, the employee can try the job as long as within 4 weeks a decision is made either by employer or employee that it is not suitable.
Although the employer has an active duty to notify potentially redundant employees of suitable vacancies, in some circumstances, particularly with large organisations or large scale redundancies, it is fair to provide employees with a list of vacancies and invite them to apply for them.
Where there are more potentially redundant employees than there are vacancies, the employer must use a fair process in selecting the employees who are to be offered the vacant positions. The same criteria apply as for redundancy selection. Reorganisations in which “everyone has to apply for their jobs” is effectively the same as a redundancy selection procedure with a wide pool for selection.
There is nothing wrong with incorporating an interview as part of the selection process as long as the process as a whole is objective. If employers attempt to use it as a “back door” method of choosing subjectively the individuals they wish to retain, redundant employees may be able to claim they were unfairly dismissed.
If employees are faced with redundancies, then any vacancies any of them are interested in must be “ringfenced” so that candidates who are not facing loss of their employment and outside candidates cannot be offered the vacancy unless no redundant employees wish to apply for the vacancy or no redundant employee is suitable to fill the vacancy.
6. Appeal
Finally, the employer should allow an employee selected for redundancy the right to appeal against the decision to dismiss them from redundancy. The appeal should be carried out by someone who has not been involved in the process up to that point as is sufficiently senior to overrule the original decision.
Determining if a redundancy is also an unfair dismissal
Failure to follow all these points does not automatically render a dismissal for redundancy unfair, it all depends on the seriousness of the employer’s shortcomings and the size and administrative resources of the employer.
It is not a defence to a claim for unfair dismissal for redundancy to say that following all the procedures would have made no difference. However, if this is the conclusion of an Employment Tribunal it will limit the award of compensation to the difference between what the employee would have received if the employer had acted fairly and what the employee in fact received, which in some cases could be very modest, or even zero.
Tips for finding a solicitor to deal with an unfair dismissal claim
Specialist legal knowledge and experience is a good start, but to “get the edge” it is useful to find a solicitor with experience of representing clients at Employment Tribunals, particularly at the Employment Tribunal where your case is likely to be heard. This is because familiarity with the way a Tribunal is likely to assess particular cases and particular circumstances helps effective advice and preparation right from the start.
Most of our experience here at John Halson solicitors is based in representing clients at the Liverpool Employment Tribunal which covers claims arising from people who have worked in north and central Cheshire including Chester, Warrington, Northwich, Middlewich, Winsford, Tarporley, Ellesmere Port, Great Sutton; and Merseyside including Liverpool, Birkenhead and the Wirral, Widnes, Runcorn, St Helens, Kirkby, Maghull, Skelmersdale, Ormskirk, Southport, and Formby.
We also regularly appear in the Manchester Employment Tribunal and occasionally in the Leeds, Birmingham and Shrewsbury Tribunals.
Links
ACAS guidelines and publications on redundancy.
Disclaimer
Please note that the information on this page is intended to be a guideline and is therefore a summary of the law only and not a complete guide. Before taking any action based on this information you are strongly advised to take legal advice. Whilst every effort has been made to ensure that the information contained on this page is up to date and accurate, no guarantee can be given to this effect.