By Lauren Harkin, Solicitor at Lemon&Co Solicitors
At the moment, you cannot pick up a paper without seeing the word ‘redundancy’ – not just nationally, but here in Swindon and the surrounding areas. Honda is ceasing production for a third of the year in a bid to avoid redundancies, but many other local companies have been unable to avoid losing employees. As the economic outlook continues to challenge businesses, many companies will be considering redundancies to reduce costs and secure their long term future.
Businesses who are considering redundancies need to ensure that the process is carried out properly and lawfully, otherwise they can find themselves faced with a claim for unfair dismissal or discrimination being brought against them – in the current economic climate, this could mean the end of a business. Lemon&Co’s Employment Law Team is currently taking many businesses through the process of redundancy, advising and guiding clients each step of the way to avoid claims.
There are three main grounds on which employees generally wish to challenge the fairness of a redundancy at the Employment Tribunal: the genuineness of the redundancy situation, the selection criteria and scoring, and the consultation process.
As businesses are entitled to organise themselves as they see fit, it is not open to Employment Tribunals to challenge the business decision to make redundancies. However, if individuals are unfairly selected for redundancy or no consideration is given to alternatives to redundancy during the consultation period, a claim for unfair dismissal can easily arise.
The first question a business must ask itself is whether the redundancy relates to a unique position or whether there are a number of employees undertaking broadly interchangeable work. In the case of a unique position that is no longer required, there is no need to apply selection criteria. However, where there are a number of employees doing interchangeable work, these employees will constitute a ‘pool for selection. The employer will then have to adopt and apply selection criteria to ‘the pool’ to determine which employees will stay and which will go. The most common method of selection is a performance/competency matrix under which all employees are marked against a number of criteria.
If your business is looking at redundancies, the consultation process is key. If 20 or more employees are to be made redundant, there must be a process of collective consultation. There must also be individual consultation with employees at risk of redundancy irrespective of any obligation to collectively consult. The individual consultation process essentially involves a series of meetings with the employee to discuss the situation and to consider any alternatives to redundancy.
Given the potential employment law difficulties regarding redundancy, employers can offer enhanced redundancy payments on the basis that the employee signs a settlement agreement, known as a compromise agreement. This prohibits the employee bringing legal claims against the employer – particularly claims for unfair dismissal. The employee must take independent legal advice before signing the compromise agreement.
As readers may appreciate, it is important to seek legal advice on managing redundancy situations. This article is only a brief overview and does not constitute advice and should not be relied upon on any particular case. The Employment Law Team at Lemon&Co Solicitors specialise in this kind of work. For further information and a quote contact Lauren Harkin or one of the Employment Law Team on 01793 527141.
