In addition to the increase in the National Minimum Wage (NMW) as part of the government’s plan to ‘Make Work Pay’, the Autumn 2024 budget introduced several measures that will have a negative impact on business costs, including increased employer National Insurance contributions.
These changes may pose significant challenges for many employers who might find themselves planning redundancies to mitigate rising costs associated with employing staff. Any redundancy can give rise to a successful unfair dismissal claim if not managed correctly. Here’s our quick guide to ensure a fair and legally compliant process.
It’s good to talk
If 20+ redundancies at one establishment are contemplated within a 90-day period, the employer must carry out collective consultation before taking any action. This needs to take place with a recognised trade union or with employee representatives elected by the affected employees. Such consultation should involve a genuine attempt to avoid the redundancies or mitigate their impact and must commence at least 30 days prior to any dismissals (45 days before where 99+ redundancies are contemplated). Individual consultation will also have to be undertaken with those employees who are selected for redundancy (see below).
The art of picking and choosing
Where redundancies involve roles for which there is more than one jobholder, or roles which have responsibilities which are potentially interchangeable with other roles, the employer may need to define a ‘selection pool’ of individuals who are ‘at risk’ of redundancy. A fair method must then be adopted to select those from that pool who are to be made redundant. Any measure which puts those with a particular protected characteristic (e.g., sex, age, disability) at a disadvantage can lead to an unlawful discrimination claim if not adjusted to remove such impact.
Talking one on one
Individual consultation should be carried out with any employees who are selected to be potentially redundant, which will typically involve a number of 1-2-1 meetings. The employee needs to be given a genuine opportunity to put forward alternative suggestions to avoid the redundancy, and the employer must be able to show that any such suggestions have been considered before a final decision is made.
When to consider bumping
Bumping is the term given to a situation where the person whose job is redundant is moved into another post, and the incumbent holder of that post is then made redundant, and it most often takes the form of a manager moving into the role of their subordinate. There is no simple answer to the question of when bumping should be considered, but factors to consider include:
- Has the employee at risk suggested the employer considers bumping?
- Does the ‘at risk’ employee have the necessary skills/experience to undertake the subordinate’s role and would they perform it as effectively?
- What is the relative length of service of those involved?
- How long is it since the supervisor carried out the role of the subordinate?
- Would there be a significant drop in salary or loss of benefits?
- Would it require a significant change to other terms and conditions, such as location or working hours?
When it comes to deciding whether or not to ‘bump’, there will rarely be a right or wrong answer. Providing the employer has considered the issues above and can set out a reasoned justification for their decision, it’s unlikely a Tribunal will interfere with it.
Maternity matters
Employees returning from ordinary maternity leave (the first 6 months) have the right to return to their original job unless that job is no longer available. Employees on additional maternity leave (the second 6 months) have the right to return to the same job unless it’s not reasonably practicable for them to do so, in which case, they must be offered a suitable alternative role on terms which are no less favourable.
The right to a fair trial
Employers have a duty to make reasonable attempts to find alternative employment for anyone facing redundancy, and employees who have informed their employer that they are pregnant, or are on or returning from maternity leave, adoption leave, or shared parental leave have an additional right to be offered any suitable alternative role that exists. This protection lasts for a period of 18 months from the date of the child’s birth/date of placement with the employee for adoption.
Where suitable alternative employment is identified for an employee who is at risk of redundancy the law provides for a trial period of 4 weeks during which both the employer and the employee can decide if the alternative role is suitable. If at the end of this period (which can be extended if both parties agree in writing) either party feels that the alternative role is unsuitable, then employment may still be terminated on the grounds of redundancy, with the employee retaining any statutory right to redundancy pay.
It’s fair to say this has been a ‘whistle-stop tour’ of the issues involved in managing redundancy. However, we are running a FREE webinar on Thursday 27 February at 2:00pm with our experts Daniel Hart and Ami Harrison who will be discussing the complexities of redundancy in more detail. This event is a fantastic opportunity for any business owner, HR professional or manager who is currently faced with the need to make redundancies, or is simply looking to better understand the steps involved. Register your FREE place here: https://rebrand.ly/r0rmt93
Alternatively, you can find an abundance of resources available for free download on our website, including factsheets on how to manage the process, how to deal with collective consultation and the special issues relating to pregnant employees. There is also a sample selection matrix and an individual consultation checklist template. https://employeemanagement.co.uk/resources/
Alternatively, our team are on hand to provide further guidance so get in touch on 01942 727200 or email enquiries@employeemanagement.co.uk without obligation.