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September 2009: Problem free redundancy programmes

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Human Law Ezine - September 2009

Problem free redundancy programmes

Frankly too many redundancy plans seem to be rushed and put together overnight. It is not surprising they are subsequently found wholly lacking when scrutinised, setting the stage for legal challenges when brought to employment lawyers and, ultimately, employment tribunals.

By planning and being aware of your legal responsibilities you can keep within the law and minimise disruption and potential financial impacts.

So what are the key ways to negotiate a problem free redundancy programme?

Apply fair selection criteria

Employers must devise a fair and transparent process to work out which people to let go, and be prepared to justify this at a later point.

Organisations can use subjective methods, such as poor performance, to select staff for redundancy but I tend to caution clients not to go down this route.

Companies should add some objective criteria into the mix such as attendance, disciplinary record and length of service or flexibility. If using subjective criteria, try to use evidence to support any score awarded, such as appraisals or staff and client feedback.

The temptation for the employer is that they try to manipulate the scores to get certain employees out; the danger is that these methods can be exposed.

My advice? Go for fair selection criteria or there is a greater risk of legal action.

Don't forget those on leave or away

Overlooking any members of staff who may be on maternity leave or on secondment could also be a cause for concern.

When informing and consulting employees about possible redundancies, don't forget to include employees on maternity leave, long term sickness absence or absence from the normal place of work. They should be invited to be included in discussions and meetings, and they also count towards total numbers to assess whether the redundancy programme falls within the collective consultation obligations.

Women on maternity leave also have certain priority rights if there is any suitable alternative employment available within an organisation - whether you are looking at large or small scale redundancies - and could bring claims for discrimination and unfair dismissal if these rights are overlooked.

Watch aged workers

The age regulations abolish the upper age limit for statutory redundancy payments‚ so employees aged 65 and over are now entitled to redundancy pay calculated in the same way as younger people.

This means that older people continue to be paid at a higher rate than younger people‚ even though this appears to be discrimination on the grounds of age. The government has said it believes this difference in treatment is justified.

The employee may be entitled to more than the statutory minimum redundancy payment under your contract of employment. The law sets out ways in which employers can make enhanced redundancy payments using the same age bands as used in the calculation of statutory redundancy.

It is unlawful for employers to use age as a factor when considering who to select for redundancy (unless they can justify this). Using length of service (for example‚ last in first out) to decide who to select could be indirect discrimination‚ although employers may try to justify this.

Follow correct consultation procedures

Failing to follow the right processes and procedure is a common flaw when it comes to making staff redundant and is a major cause of complaint for employees.

If you are proposing to make 20 or more staff redundant, it is necessary to follow a thorough collective consultation procedure to avoid any claims for unfair dismissal or paying out a protective award. A protective award can be made by an Employment Tribunal in favour of individuals who have been made redundant if their employer failed to arrange for elections of employee representatives in accordance with legislation or failed to consult with appropriate representatives of affected employees about impending redundancies as required by law.

Failure to follow these rules will mean that each affected employee could apply to the Employment Tribunal for up to 90 days' gross pay, in addition to any unfair dismissal claims.

If contemplating making 19 or fewer employees redundant at one site within a 90-day period, employers must adopt the three-step statutory dismissal procedure. This involved a statement of the reasons for action, a formal meeting and an appeal mechanism

Do not hide behind your advisors

It is very important to be honest with employees and communicate the reasons for the redundancies.

Bear in mind that consultation with employees should be with a view to reaching agreement and that employees are entitled to be consulted about the reason for the redundancies, not just the fact that they are happening.

Some of the best redundancy programmes that I have witnessed have been done by the employers themselves rather than [WHO?]. By having the courage and authenticity to communicate the redundancy proposals to the staff and doing it right, these good employers minimise the prospect of resentment and legal action coming later.

Use appeal hearings

If the projected redundancy is going to be contested the member of staff may appeal.

Employers need to be very careful about avoiding appeals from angry staff and the appeal within a redundancy as an appeal is a good mechanism for understanding where objections are being made from the other side. Employees who appeal against their selection have interesting insights into the selection process and often call foul with good reason. This opportunity - the appeal - allows the employee to get their thoughts in front of a different person, usually more senior, to reappraise the selection

The key benefit of the appeal process for the organisation is that the firm can have a good dialogue with the employee and determine the strength of any potential Employment Tribunal claim against them.

It can also help clear up any simmering resentments which the employee has.

Consider mediation or third parties to resolve conflicts

If conflict seems to be brewing you might consider sitting down and talking, using an independent person, like a mediator, to try and avoid the problems escalating and lawyers becoming involved. Mediation works in more than 80% of cases and leads to positive resolutions saving both employer and employee money and stress.

For advice on your legal responsibilities in a redundancy situation or for help in conflict resolution contact Justin Patten of Human Law Mediation.

Further reading:

Using mediation in redundancy situations
The Peacemaker – mediation in action

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