According to a recent survey conducted by the Chartered Institute of Personnel Development and KPMG, employers who were holding off making redundancies have reconsidered their position as a result of deteriorating economic conditions.
Twenty-six per cent of responding employers reported having contingency plans to make new or further redundancies in the next 12 months, in addition to those already planned. The survey also reported that every employee made redundant costs the employer on average £10,000.
Redundancy law has moved on since the last downturn affected the baking industry and you will expose your business to expensive claims of unfair dismissal and discrimination if you do not follow current law and practice. The compulsory dispute resolution regulations generally apply to all dismissals, including redundancies, except where the rules on collective redundancies apply. If you do not follow the minimum three-step dismissal procedure, the redundancy will be automatically unfair, where an employee has requisite service, and compensation can be increased by up to 50%.
In brief the compulsory dismissal procedure requires:
Step 1: The employer to write to the employee stating the grounds for their proposed redundancy and inviting them to attend a meeting to discuss the situation before a final decision is taken.
Step 2: Meeting. Step 3: Appeal.
Whenever a redundancy is proposed, meaningful consultation must take place, and should be capable of being shown to have taken place, in order to avoid a negative outcome at an Employment Tribunal. Two or more meetings will normally be required to allow for meaningful consultation. The meetings should also be used to explore the possibility of alternative employment, which is another crucial element required to achieve a fair redundancy.
Employees have the right to make a reasonable request to be accompanied by another employee or a trade union official of their choice at the meetings. Companions do not have the right to answer questions put to the employee, but can otherwise take an active role during a meeting. Compensation can be awarded where the right is infringed.
In addition to complying with the compulsory dispute procedures, an employer must be able to show that it acted reasonably in all the circumstances (including its size and administrative resources). Fair and objective criteria and a consistent approach are key. A paper trail showing what an employer did is usually crucial to defending a claim.
Where an employee is selected as being potentially redundant, subject to consultation and after the employer has applied its objective criterion to the pool of staff that were at risk, difficult questions often arise about how much information should be disclosed to the employee to explain their selection. Based on recent case decisions my advice in such situations is:
l Enclose details of the individual’s own scores (based on criteria such as skills, flexibility and length of service) with the Step 1 letter
l Enclose a schedule of the other pool employees’ total scores, but on an anonymised basis with the Step 1 letter.
This is slightly more cautious than the cases suggest, but should provide you with substantial protection and has the benefit of allowing for any scoring mistakes to be picked up during the consultation stage rather than at the Employment Tribunals.
The legal landscape looks set to change on 6 April, 2009. The compulsory dispute resolution regulations will probably be abolished and replaced by a new Acas Code of Practice, the draft form of which applies to disciplinary and grievance procedures only. Redundancy and fixed-term contracts will be beyond its scope. The extent to which Employment Tribunals apply the principles in the current procedures to redundancies from 6 April, 2009, remains to be seen.
? Ray Silverstein is a partner at legal firm Browne Jacobson