I hardly need to tell you that we are living in unprecedented times and in almost every aspect of our lives it seems. None more so perhaps than in the world of work. Even for those carrying out their jobs and not furloughed, homeworking is commonplace as are social distancing measures in the workplace.
At work, we will return to some form of “new normality” but inevitably for some that will involve redundancy as the furlough scheme comes to an end. That’s most certainly the case in the airline industry given announcements made this week by BA and Virgin. Not my favourite subject to write about but inevitably as an Employee Relations specialist, it’s a fundamental part of what I support businesses in doing. In a previous blog called “Redundancy with respect” I wrote about the “how” of redundancies and this time I turn attention to the “what”. This blog is by no means intended to constitute legal advice nor can it cover every aspect (if it did the length would dissuade you from reading it).
It is intended to give you an overview of redundancy and at least highlight certain measures employers need to take in certain circumstances.
What is redundancy?
To answer the question we have to start with the legal definition:
“For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to –
(a) the fact that the employer has ceased or intends to cease –
(i) to carry on the business for the purposes of which the employee was employed by him, or
(ii) to carry on that business in the place where the employee was so employed, or
(b) the fact that the requirements of that business –
(i) for employees to carry out work of a particular kind, or
(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer,
have ceased or diminished or are expected to cease or diminish”.
s. 139, Employment Rights Act 1996
In layman’s terms then if there is a reduced need for employees to carry out work “of a particular kind” or some form of business closure or reorganisation then the redundancy definition is likely to be satisfied.
Who will be made redundant?
Let’s assume for a moment that a business makes widgets in a factory. If that’s all they do and they decide to move their premises three hundred miles away or close down completely, then the whole workforce is likely to be made redundant given that the requirement to carry out the work in a particular place has ceased.
However, if widgets are only one of a range of goods they manufacture what happens if the demand for that product has diminished to the point where rather than have 40 people employed to make widgets they only need 15? In that scenario, there would potentially be 25 redundancies and the employer would therefore have to determine fair and non-discriminatory selection criteria by which to select those to be made redundant. Alternatively, employers will often invite volunteers for redundancy however in the event that not enough, or too many, volunteers come forward then selection criteria will still need to be determined.
Redundancy in numbers
If 20 or more redundancies are proposed in one location within a period of 90 days then employers have to collectively consult for a period of at least 30 days. If one hundred or more redundancies are proposed then consultation must last for at least 45 days. In both these scenarios, employers must inform the Secretary of State of the proposed redundancies. If the proposed redundancies are less than 20 then it will be necessary to carry out individual consultation and I typically recommend a period of 2 weeks.
In all redundancy situations, even where collective consultation is required, individual consultation with employees must take place.
For the purposes of collective consultation employers can use a recognised trade union, an existing standing employee body; otherwise workplace representatives will need to be put in place by means of a ballot in determined “constituencies”.
Collectively consult about what?
For the legal answer, we need to look at s.188 Trade Union and Labour Relations (Consolidation) Act 1992 but I’ll summarise. There is specified information that must be provided to employee representatives in writing:
- the reasons for the redundancies
- those employees who may be affected and the numbers of each
- the method of selection (the selection criteria)
- the timing of redundancies
- the method of calculating redundancy payments
- the number of agency workers engaged by the employer and the roles they are undertaking
And the employer must consult “with a view to reaching agreement” on ways of:
- avoiding redundancies
- reducing the number of redundancies
- mitigating the impacts of redundancies
Consultation not fait accompli
Consultation must be just that: employers are making proposals and seeking input, not simply informing employees. Trade union representatives in my experience are particularly adept at spotting when that line is crossed and in any event, there is a real legal consequence of failure to consult.
Employers need to have the right mindset to ensure they stay on the “consulting” track and I would never advocate starting redundancy consultation without plenty of practice and preparation.
And there’s more
I said at the outset that this was an overview as there is a lot more to contemplate including (and this is by no means an exhaustive list):
- how often should consultation meetings take place during the specified time period?
- what happens if employee representatives don’t agree with the selection criteria?
- what do you do if there is a tied score in the selection criteria?
- how do you handle vacancies that arise if they are classed as suitable alternatives roles, or unsuitable for that matter?
- what is a “suitable” alternative role?
- how do you ensure those on maternity leave, or other long-term leave (including sickness) are consulted?
- how do you ensure that those on maternity leave are availed of the special protection they have in the event of a suitable alternative role arising?
- how do you manage ballots of workplace representatives?
All this is really to demonstrate that in the event of redundancies, specialist skills and knowledge are needed. Like everyone I hope that in time we will be talking about recruitment and training, rather than redundancies but in the event they’re necessary businesses are ill-advised to go it alone.