NO EASY OPTION- A GUIDE TO THE LAW ON REDUNDANCY

We often see our business as a barometer of the economy. The more calls we receive on redundancy the less healthy the economy.

Over the last few weeks there has been a noticeable increase in the number of calls we are taking on this difficult subject;- a clear sign that we may be heading toward recession.

One major problem employers is that employers often see redundancy as some sort of  'catch all'. If I cannot sack him for misconduct or poor performance can I make him redundant? Is a question we are often asked.

The answer is simple. As an employer, you are entitled to run your business as you see fit, including the making of redundancies.  However, dismissal on grounds of redundancy can still be unfair as with any other type of dismissal. You are still required to act reasonably.

In the case of redundancy, therefore, to pass the test of reasonableness set out in the statute, you must have an objective method of selection and fairly apply this amongst all employees.

One option for employers is to seek volunteers.  Many companies are afraid to use this method in case the volunteers are not suitable.  There is no obligation on an employer to accept those that come forward.  An employer is entitled to state that they reserve the right to refuse volunteers, particularly where it will leave the company with an unbalanced workforce.

Pool for Selection

Assuming you require to make compulsory redundancies, the first thing you require to look at is your pool for selection.   From this you require to identify positions for potential redundancy.

You then need to identify the grounds upon which you will select for redundancy. 

Selection Matrix

Therefore, most employers look to carry out a selection matrix with a number of criteria in it, i.e. flexibility, length of service, absence, sickness, performance, transferable skills and disciplinary record.  Wherever possible, these criteria must be objective and measurable.

For example with flexibility, in order to make it objective, you need to determine how points will be scored.  If someone can carry out 4 tasks, they may score, for example, 5 points.  This can then be reduced where employees score lower if they can only carry out 1 task.With length of service, if an employee has one year's service he scores one point, two year's service two points etc. Since age discrimination legislation was introduced, last in first out cannot be used as a sole selection criteria without risk of it being held as discriminatory.

With sickness absence again, if an employee has no absences he can score 5 points, up to three absences 4 points.  Again this can be done on a sliding scale as you consider appropriate.  One we have used before says:1-3 absences = 4 points, 4-6 absences = 3 points etc.  Over12 absences they would score no points.  Absences for the care of dependants or other absences protected by law should be excluded.The same can be applied to conduct/disciplinary record.  An employee with no disciplinary warnings scores 5 points.  A verbal warning scores 3 points, written warnings 2 points, final written warnings 1 point or similar. 

Finally, in respect of transferable skills, you again need to identify where those skills will be transferred to within the business and therefore how an employee comes to score each of their respective marks.

Consultation

Having done this, you need to embark on individual consultation with the employees affected.  This should last at least for a period of one week (preferably longer) during which time the employee can either work or be invited to remain away from the workplace in order to consider their options and take appropriate advice.  We prefer the latter approach.

During the initial consultation, it should be pointed out to the employee why the redundancies are necessary.  If this involves some repetition, so be it.  You should then explain why the employee is being proposed for redundancy based on their score.  You can explain to them how their scores were arrived at. You are not required to show them everybody else's individual scores, but if asked you should make the total scores available and give an indication of why they scored less in certain areas than other employees.

They should then be given the period of one week to take advice and to consider their position or make representations or alternative suggestions.  This period of consultation should be confirmed in writing as well as its objectives.Once the week has been completed, the employee should be brought back in for a second consultation meeting at which the employee must be invited to make any representations they wish.  If the employee makes representations these should be considered.  However, in most cases, employees do not wish to make representations and accept the position.  If that is the case the redundancy can be confirmed by issuing formal notice of redundancy.

 Appeal

The final point to bear in mind is that an appeal process must also be followed in the case of redundancy dismissal. As ever the advisory service is available to assist you on 0845 6653006