Category Archives: redundancy

MOD Redundancies: Ten Top Tips for Successful Management

The MOD has just announced that there are to be 5,000 more redundancies in summer 2013.  This follows a gradual reduction in the number of troops the UK maintains, with yet more to come so that by 2020 there will only be 10,000 in total.  This is all part of a drive to help cut the deficit.

When managing redundancy there are key things that the MOD along with any employer needs to know.

1. Ensure the Redundancy is Genuine

An employment tribunal can investigate whether the redundancy is genuine, ie the real reason for dismissal so do not be tempted to dress up a performance or capability dismissal as a redundancy. This could result in a finding of unfair dismissal.  Before starting the process assess if you could avoid making redundancies by considering whether cutting overheads or restructuring via salary cuts, shorter working weeks, job shares or unpaid sabbaticals could save jobs.  You could also consider offering voluntary redundancy with a possible enhanced package to encourage employees to come forward.  The needs of the business are the most important thing however and you do not  have to give voluntary redundancy if you wish to keep valuable members of staff who volunteer. 
2. Ensure you follow your own redundancy procedures


If you have a company redundancy procedure, make sure you follow it.  An employment tribunal will be very interested in whether you have a policy and that you have followed it.  If you don’t follow it you could be penalised for doing so.
3. Ensure you have you worked out your pools for selection


Ensure the proposed restructure is set out so it is clear from which departments or groups of employees redundancies are being made.  Consider which jobs are at risk and identify the groups of employees who are doing similar jobs where the redundancies may be made (the pool).  
4. Ensure selection criteria for redundancy is fair and objective


Devise a redundancy matrix to select who may be made redundant using selection criteria which is capable of being measured.  It must be non-discriminatory. Reflect the needs of the business when selecting who may be made redundant.  Selection criteria can include skills, experience and performance.  Sickness absence can be taken into consideration but be careful in case there may be disability discrimination slant on that. 


5. Ensure you consult correctly


Consultation should be meaningful and correct.  Once you have identified which employees are at risk of redundancy, they should be advised of this and told the length of the consultation period; this will vary depending on the proposed number of employees possibly being made redundant.  With less than 20 employees the consultation period is not stipulated in employment legislation so the timeframe can be flexible, however, do not rush this process.  With 20-99 employees the consultation period must be 30 days before the first dismissal.  With 99+ employees the consultation period is currently 90 days but from April 2013 this will be reduced to 45 days.  It is important to include employees on long-term sick leave or maternity leave in all consultation discussions.  Employee consultation meetings should be face to face and should be a two way process. 
6. Consider Ways to Avoid Compulsory Redundancy


Discuss and give serious consideration to any suggestions made by employees that you have not considered – eg early retirement, freeze on overtime, ban on recruitment, terminate agency temps.  Employees can sometimes come up with some creative ideas. 
7. Look at suitable alternative employment


With each employee at risk of being made redundant if possible try and look for alternative employment elsewhere within the company – this is sometimes more possible with larger companies.  It must be deemed to be mutually suitable with a four week trial period being offered to consider suitability by both employer and employee.  If the trial period does not work out the employee may be made redundant with compensation if appropriate.   If the employee refuses to accept reasonable suitable alternative employment they may lose the right to redundancy compensation.



8. Ensure you correctly calculate redundancy payments


Don’t forget to work out the cost of contractual notice or payment in lieu of notice and redundancy payments. Statutory redundancy payments are based on length of service, age and salary, subject to a current statutory cap of £430 a week; this will rise to £450 from 1 February 2013. Employees need to have two years continuous service to be eligible for redundancy pay.  If the employee earns less than the statutory figure then you calculate the figure based on gross actual pay.  Check employees’ contractual, policy and custom and practice rights to redundancy payments as there may be a right to enhanced redundancy payments.   Untaken holiday also need to be calculated and paid.  Bonus and commission payments may also be due.   Notice pay will also need to be calculated if the notice pay is not being worked.  Redundancy pay is untaxed up to a maximum of £30,000, however holiday pay, notice pay and bonus’ are taxed.
9. Set up a Dismissal Meeting


If compulsory redundancy can not be avoided organise a dismissal meeting and confirm the details in writing giving the right to be accompanied.  Confirm the decision to terminate employment during the meeting and follow up with a confirmation letter.
10. Give the Right to Appeal


The termination letter should set out the terms of appeal to a more senior manager providing the right to be accompanied.

Redundancy Consultation Changes on the Way

The Government has confirmed its intention to change the way employers consult workforce representatives during large-scale redundancies, including by reducing the 90 day consultation period to 45 days. The changes will come into force in April 2013.
Some employers will welcome this as usually consultation is completed well within the 90 days with the current law preventing the business from re-structuring sooner. The TUC however had said the government is making it easier to sack people.
Currently, an employer is required to inform and consult with trade union or other elected employee representatives where it is proposing to make 20 or more employees at one establishment redundant within a period of 90 days or less. Consultation must begin no later than 30 days, where between 20 and 99 redundancies are proposed, or 90 days, where 100 or more redundancies are proposed, before the first dismissal takes effect.
Fixed-term contracts will be excluded from collective redundancy consultation.  Fixed term contracts and their expiry cause particular problems for the education sector, and mean that many education institutions engage in rolling consultation processes in order to comply with the current consultation obligations. This step is intended to alleviate those problems.
ACAS will produce non-statutory guidance to address key contentious issues in the consultation process.
Employers have the legal obligation to begin consultation “in good time” and to ensure it is meaningful. 

The Importance of Consultation during Redundancy

The recent case where ex-Woolworths staff received a whopping £67m compensation payout at an employment tribunal demonstrates the importance of consultation in a redundancy process.  In this case the administrators failed to consult the shop workers union on the redundancies and instead focused on trying to find a buyer.

The tribunal found the administrators of Woolworths had failed in their legal duty to consult the union with the result that over 24,000 former employees received a Protective Award of 60 days’ pay, capped at the statutory maximum of £330 a week that applied at the time.   It had been the view of the administrators that closures were inevitable therefore there was no genuine open minded consultation. Also the time allocated to consultation meetings was far too short which also demonstrated their opinion that redundancies were inevitable.
The judgement sends a clear message to employers for the price paid for failing to consult properly.  It is really important to carry out a fair and reasonable consultation process in good time before any dismissals take place.  A group consultation should announce the company’s proposals then be followed by individual consultation meetings.   When carrying out a collective consultation process with unions or employee representatives individual consultation needs to take place as well.
During individual consultation employees need to know the selection criteria applied and how they have been scored and at the same time be given the opportunity to discuss ways to avoid redundancy. They should be gven the opportunity to suggest ways of avoiding redundancy.  The employer may have alternative employment opportunities available in the company which should be discussed with the employee explaining how the roles can be applied for.  Employees need to fully understand the redundancy process and it should not be rushed at all.
Employers should keep a paper trail to show that full and meaningful consultation has taken place, which includes letters and notes from all the meetings.
More information can be found on the ACAS website