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February 2011 newsletter

March 21st, 2011

Newsletter: February 2011

Our first free seminar dealing with issues of redundancy, lay off and changes to employment contracts took place on 28th  January and was well received.

We are planning to run the seminar again on Friday 8th April at Liverpool Cornerstone (next to our office).

Below are summaries of questions which arose in the seminar and our answers.

   1. Can we change how we pay a member of staff for extra work he undertakes? 

A: If the way in which the staff member is paid is set out in the employment contract, you will need to change the contract. If not, suggest that it will be changed and update the contract. If the employee objects on the basis that it is a binding verbal contract, changing it unilaterally risks the employee resigning and claiming constructive dismissal. However, if they accept the change and continue to work without objecting to the change to the overtime payment, then the contract will have been changed even if nothing is put in writing. It is better to put it in writing as evidence of agreement to new terms and conditions.

  If you don’t want to risk a resignation and constructive dismissal claim, or if existing arrangements are incorporated in a written contract, you will need to meet the employee and explain the changes you propose and the reasons for those proposals. Allow a short consultation period (1 week should suffice) and then meet again. If the employee agrees give him a new contract to sign which takes effect after the required notice period.

 If the employee still refuses to sign, you need to decide whether to give notice and offer a new contract on new terms and conditions. Take advice at this stage, as this risks a potential unfair dismissal, so you will need to discuss with a solicitor whether or not the change can be justified and assess whether the change is important enough to impose on the employee.

  2. What if  an employee who is made redundant claims they were unfairly dismissed becasue they were replace, when in fact the replacment was a freelancer?

 A: A redundancy situation is defined as a reduced need for employees, not that the work does not need to be done. So an employer is entitled to decide to reduce the number of employees of a particular kind and instead use a self employed freelancer(s) to carry out the work. As long as the proposal is put to the employee facing redundancy at a consultation meeting and they are given an opportunity to ask questions, respond, and make alternative suggestions which are then considered before a final decision takes place, the redundancy can still be fair. Before dismissal takes place the employee must be invited to a final meeting at which the decision to dismiss will be taken and offered the opportunity to appeal the decision afterwards.

  3. Is it lawful for an employer to give the option of short time or redundancy? 

A: An employer cannot put an employee on short time unless the contract allows it (expressly or by custom and practice). However, in the course of a redundancy consultation an employee can be offered the alternative of short time. Many employees would agree to this seeing it as the lesser of 2 evils and if the employee agrees, it can be implemented.

  The arrangement should be confirmed in writing, making it clear how long the arrangement is to last. “Short time” is only supposed to be for a short period and the employee can still claim redundancy. However, if the change is intended to be for a longer period, the agreement should say this and may be either a temporary or permanent change to the contract.

 If shorter hours are offered as an alternative to redundancies, then you may need all employees of that type to agree to accept a cut in hours. It is not as easy to impose changes in hours on reluctant employees, as it is to make staff redundant. It is still possible to push through a contractual change of hours even with staff who won’t agree, but proper procedures need to be followed. These include consultation and then terminating contracts on notice and immediately offering new contracts on shorter hours to start when the old ones end.

   4. Is it illegal to take away Bank Holiday pay from employees? If so what is the procedure for doing this? 

A: All employees are entitled to 5.6 weeks holiday per year. There is no right to have particular days off, including bank holidays. If bank holidays are included in compulsory holiday then the employee should be paid their normal pay for weeks which include bank holidays.

  If there are arrangements to pay employees enhanced rates of pay for working on a bank holiday, and the employer wishes to change this to standard pay, then a procedure should be followed as summarised in the second and third paragraphs to the answer to question 1 (above).

 5. In the event of death – is redundancy still payable to an employee? If so who should fund this?

 A: If an employer is an individual and dies then if the business closes as a result, the deceased employer’s estate will be liable for the redundancy payments. If the estate has insufficient funds to pay the redundancy, the employees can apply for payment from the Government redundancy fund. The redundancy fund can then seek reimbursement from the deceased employer’s estate.

 If the business is continued or transferred then TUPE will apply and the new owners will become the employers without there being any termination of employment contracts or redundancies.

  6. What are the issues in relation to making older emploees redundant?

A: Employers should follow the same principles for older people as anyone else. However, an employee can be retired at or above the normal retirement age fairly by an employer provided the right procedure is followed.

 An employer when choosing criteria for redundancy selection should take care in using criteria that could have a discriminatory impact, unless the criteria themselves can be justified. “Last in first out” may discriminate against younger employees but might be justified on the basis of the wish to retain experienced employees or save on redundancy costs. Criteria such as “flexibility” and “future potential” could be operated in such a way as to discriminate against older employees, but may be justified as long as those who carry out the assessments guard against making any assumptions about older employees and if possible use verifiable evidence to justify the assessments of employees. 

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