2020-06-17
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Covid19 – are redundancies inevitable?

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Posted by Tina Chander on 17 June 2020

Tina Chander - Head of Employment Law
Tina Chander Partner - Head of Employment Law

It has become apparent that despite the Government introducing the Coronavirus Job Retention Scheme to ease the pressure many are currently facing as a result of Covid-19, this is no "silver bullet". 

While this temporary measure has undoubtedly assisted numerous businesses maintain headcount in the initial few months of the pandemic, it cannot alleviate the ongoing effects Covid-19 will inevitably have on the workplace long past the end of the scheme.   

With the end of the scheme now in sight, in the absence of some intervening miracle, businesses are going to finally be forced to seriously consider the less favourable options the scheme enabled them to avoid momentarily; the most drastic of these being redundancies.

While never a good topic to discuss, it imperative that employers are aware of the correct redundancy process to follow.

Stages of the process

Stage 1: Establish whether there is a genuine redundancy situation;

Stage 2: Establish the number of employees at risk of redundancy;

Stage 3: Look for alternatives to redundancy;

Stage 4: Establish a proposal for the organisational restructure and its supporting rationale;

Stage 5: Inform employees they are "at-risk" of redundancy;

Stage 6: Establish selection criteria if the proposal concerns more roles than proposed redundancies;

Stage 6: Conduct the first consultation meeting;

Stage 7: Provisionally score employees against the selection criteria;

Stage 8: Conduct the second consultation meeting;

Stage 9: Decide on the proposal; and

Stage 10: Allow the employee to appeal.

Not all of the stages mentioned above will need to be implemented in each redundancy process, depending on the number of roles in the "pool" of those being considered for redundancy and how many redundancies the employer is proposing to make. If in doubt, please seek legal advice from an experienced employment lawyer as to the process required in your specific circumstances.

It is important to note that throughout the process, employers should keep an open mind – redundancy is only a proposal at this stage. This will involve enquiring as to whether the affected employees have any counter proposals to avoid the proposed redundancies.

A genuine redundancy situation

Arguably, the most important stage in the process is the initial one – without establishing a genuine reason for redundancy, employers should not embark down this route. It is imperative that the employer can demonstrate a genuine business need for the redundancy to occur. Otherwise, the redundancy risks being deemed unfair and leaves the employer exposed to risks of constructive and unfair dismissal claims.

There will be a genuine redundancy situation where:

  1. There is a closure of the business within which the employee was employed;
  2. There is a closure of the place of business where the employee was employed to work; and/or
  3. There is a reduced requirement for the employee to carry out work of a particular kind.

Employers mustn't fail to comply with this initial stage, or any further stages of the process, simply because they believe it to be obvious, or the outcome of the process to be inevitable.

Alternatives to redundancy

Obviously, redundancies should only be considered as a last resort. Before looking at the possibility of potential redundancies, employers should explore alternative options, including but not limited to:

  1. Voluntary redundancies – employees volunteer to be made redundant as opposed to compulsory selection;
  2. Reduced hours of work – this can involve short-time working or overtime bans; and/or
  3. Temporary stoppages of work – this can include lay-offs or unpaid leave.

Taking the time to evaluate other measures, and thus avoid potential redundancies occurring, will reflect positively on the employer's process and make it more likely to be judged as fair.

Suitable alternative employment

As part of the redundancy process, an employer must offer the employee suitable alternative employment (if this exists) as a way to avoid their potential redundancy. It is important employers check their vacancy lists before consulting with potentially redundant employees to be able to provide this information.

Should an employee take up the offer of suitable alternative employment, they will be entitled to a trial period of four consecutive weeks in this new job role to assess whether, in practice, the role is suitable for them.

Collective consultation

The law dictates a different, more complex, procedure when large scale redundancies take place. As such, where an employer proposes to make 20 or more employees at one establishment redundant within a period of 90 days or less, an employer should follow a "Collective Consultation" procedure.

However, this does not mean that the individual consultation procedure for redundancies can be ignored. Once a collective consultation has concluded, employers must make sure that they still consult individually with all employees regarding their potential selection for redundancy. Individual consultation is still essential to ensure that the employer follows an overall fair process. Where necessary, collective consultation should be inserted directly above stage 6.

Risks

Employers who fail to follow a fair, transparent and open-minded redundancy process open themselves up to potential claims for both constructive unfair dismissal for the duration of the process and unfair dismissal after completion of the process. Therefore, employers mustn't rely on the redundancy process as a pretext for exiting difficult or under-performing employees from the business.

On top of this, if the employer does not provide the employee with their usual basic entitlements of notice in accordance with their contract of employment and payment for their accrued but untaken holiday upon their redundancy dismissal, alongside a redundancy payment (if the employee is eligible), they may face further claims for breach of contract or unlawful deduction of wages.

Conclusion

While the redundancy process is often unpleasant for all involved, it is crucial employers comply with their duties, however difficult this may be, to provide themselves with the highest protection should the matter end up in an employment tribunal.

About the author

Tina Chander

Partner - Head of Employment Law

Tina is head of our employment law team. She deals with contentious and non-contentious employment law issues.

Tina Chander

Tina is head of our employment law team. She deals with contentious and non-contentious employment law issues.

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