Human Law Ezine - February 2011
A safe route through the redundancy legal minefield
The process of making an employee or groups of employees redundant is a real minefield for employers and recent case law and legislation have added to the complexity. If employers are to keep their costs to a minimum and avoid Tribunal claims it’s essential that they follow the correct procedures and more to the point adopt the correct process for each particular redundancy scenario.
What are the principles at play and how can you minimise costly legal disputes and things going wrong?
Pick your way through the legal minefield
Despite government commitment to reduce the number of Employment Tribunal claims the fact remains that making staff redundant legally is difficult. The recent case of Fulcrum Pharama (Europe) Ltd v Bonassera and Hr Advantage Ltd illustrated how even those who follow a seemingly full and considered process can still get it wrong. It’s worth exploring this case because it highlights a number of good practices yet also points out how a misjudged approach can still lead to a Tribunal claim.
This case addressed a claim bought by Ms Bonassera against her employer who made her redundant from her role as HR manager. It highlights the importance of employers’ giving careful consideration to all options when considering redundancy. In this case, having been advised that her role was at risk of redundancy Ms Bonassera suggested that she and a more junior HR executive should be both placed at risk of redundancy and both considered to take on the one remaining role.
Although notes prepared for a meeting with her considered the option of ‘bumping’ her into the more junior role and making the HR executive redundant it was never discussed with her. Instead other options like part-time hours for both employees were discussed. The company eventually concluded that it was the HR Manager’s role that was redundant and therefore she had to go.
Both the Employment Tribunal and an appeal decided that the employer was wrong to make this decision without any further meaningful discussion with Ms Bonassera and upheld her claim for unfair dismissal.
This is not a case where the employer had disregarded proper redundancy procedure. It has a pooling process for considering which jobs were redundant and which employees could be considered for the remaining positions. It clearly did consider options and notified those who were at risk. There’s plenty of evidence that the employers had given considerable thought to the whole redundancy process, yet still they got it wrong. This case makes it clear that employers need to tick all the boxes but also that there is no universal process that can be applied. Organisations must ensure that the right process is adopted for each redundancy scenario. Getting specialist legal advice at the outset and throughout the process is essential.
Consult, all the way
In spite of the recent case above it is fair to say that the level of consultation undertaken by the employer with employees and unions will normally make a huge difference to how any redundancy process is judged should a Tribunal claim be made. It’s one of the key variables in determining if someone has been made legally redundant.
A word of warning however, whilst we subscribe to the view that management should not hide behind their lawyers, we also take the view that the consultation process is a conflict situation and should be managed as such. That means obtaining professional advice from ethical and experienced employment lawyers, considering strategy as well as tactics and planning very carefully the process to be followed. Specific training for the management team involved in communicating the redundancy messages as well as those involved in pool selection criteria is essential.
Provide outplacement support
Common practice in larger scale redundancy programmes in the private sector is the provision of outplacement support to help redundant employees transition to their next role or support them in job seeking.
With wide-scale redundancy in the public sector management there needs to start identifying what are the fundamental fears of staff at risk. Awareness of these fears, which might include the fact their skills will not be suitable in the private sector, will allow the employer to tailor support to these areas.
Use mediation sparingly
Regular readers might be shocked to read me suggest this but in my experience organisations are increasingly keen to use mediation to minimise legal expenses. But if used at the wrong time or in the wrong way they will find themselves picking up the costs further down the line. Using mediation too soon can be seen as a sign of weakness. It is crucial that management demonstrate confidence that the process being used is ethical and legal.
Mediation is likely to be a sensible approach at the appeal stages of a redundancy dispute and in our view will be invaluable for public sector organisations as they go through wide-scale redundancy, if they are to avoid Tribunal claims.
Redundancy may not be the answer
Make sure you explore all the other options before settling on redundancy. Recently 7,000 staff at Neath Port Talbot Council accepted a deal brokered by managers and the unions aimed at minimising compulsory redundancies as the council looks to close a £24m gap in its budget by 2014. Staff agreed to cuts in pay, overtime and travel allowances in return for safeguarding jobs, at least for the time being.
For more details on how you can prevent the escalation of employee disputes, including those caused by redundancy read our 14-page guide to Keeping Away from Employment Tribunals and Court Room Battles. The guide explores fully the different options open to you in resolving disputes – and their costs. Download your copy here.
For advice on solving employee disputes without going to court and for training in dispute management skills for managers contact Justin Patten here.