**Wrigleys’ Essential Employment Guide** The Redundancy Process
A guide to redundancy: the foundations of a fair redundancy process.
Part 1 - The foundations of a fair redundancy process
In this series of articles for employers, we consider the key elements of a fair redundancy process and some of the pitfalls to avoid along the way.
In part one, we cover the foundations of a fair redundancy process, highlighting good practice for approaching a potential redundancy situation and key first steps.
What is redundancy?
As a first step when considering restructure or reorganisation impacting on staff, you should ask yourself whether the proposals might give rise to a redundancy situation.
Simply put there are three types of redundancy:
- all or part of a business is closing down;
- a particular workplace is closing down; and/or
- the employer needs fewer employees to carry out work of a particular kind.
If one of more of these applies, the reason for any dismissals is likely to be redundancy and you should be aware of the rights and obligations which arise in a redundancy situation.
Having a sound business case underpinning proposed redundancies is essential. This means gaining a clear understanding of and documenting the context and key drivers behind the proposed redundancy. The situation may stem from a downturn of work, funding or contract loss. It may arise from changes in your regulatory, technical or market context. Your business case should also identify the financial, operational and organisational impacts of this broader context.
Where possible, your business case should set out the alternative ways of resolving these issues which have been considered before proposing redundancies and any action which has already been taken to improve the situation. This might include exploring new revenue streams, looking for non-staffing cost-savings and efficiencies, recruitment freezes, and review of the use of agency staff or outsourced contracts.
Being able to communicate the business reasons for proposed redundancies clearly and consistently to employees and their representatives a vital starting point. Sharing as much information as you can on the background to proposed redundancies will help to create solid foundations for your consultation and build trust with your staff and their representatives.
Your redundancy process plan
Good planning is essential to a well-run redundancy process. As part of this, you will need to work out a realistic proposed timeframe for the process which takes into account your consultation obligations and works backwards from the date notice will have to be given for affected staff.
Planning for consultation – do your homework
Before you start planning your process, you should do your homework on what makes a fair process. Helpful general guidance is available from Acas, CIPD and on the gov.uk website. You should also consider taking legal advice in good time before you start. Waiting to take legal advice until later in the process can lead to difficult staff and trade union relationships, higher costs and greater risks of a claim.
And of course, don’t overlook any policies or collective agreements which are relevant to your workforce. These may well include rights and obligations which go above and beyond statutory rights and require you to discuss the situation with trade unions.
Remember when planning your timeline that you will need to consult meaningfully with staff and in some cases with their representatives. That means consulting before decisions are finalised so that staff can influence both the process followed and your decision-making. Consultation is not just about when redundancies are to take effect or how much redundancy pay is on the table. It starts with explaining the need for change and sharing your proposals for identifying those at risk of redundancy, including the redundancy pool and selection process.
Collective redundancy consultation
If you have 20 or more potential dismissals within a 90 day period, you have a statutory obligation to consult with employee representatives, beginning consultation at least 30 days before the first dismissal takes effect. Where there are 99 or more potential dismissals, consultation must start at least 45 days before the first dismissal. Remember that these numbers will include any potential dismissals where you are offering re-engagement on new terms.
If you do not have a recognised trade union or relevant employee forum, you will need to factor in time for staff to nominate and elect representatives before you commence collective consultation.
Don’t forget that where there may be 20 or more dismissals, you must send form HR1 to the Redundancy Payments Service which acts on behalf of the Secretary of State for Business and Trade. There is also statutory information which must be sent to representatives at the outset of the consultation.
You will need to consult with individuals who are at risk of redundancy in addition to collective consultation. A series of individual consultation meetings will need to take place before issuing notice of termination whether or not collective consultation is required.
Collective redundancy consultation requirements can be complex and you should seek legal advice if they might be engaged.
What is a fair redundancy process?
If collective redundancy consultation obligations do not apply, there is no statutory process or Code of Practice which must be followed. However, we can determine from unfair dismissal case law the key elements of a fair redundancy process. These are set out below. Please note that this is not a complete list of all required steps to ensure your process is fair, and advice should be taken on the details of each stage.
- You should start by warning those involved of the possibility of redundancies, share the business case, and consult with affected staff or their representatives on the process you are planning to go through and the proposed timetable.
- Taking into account feedback received, you should then make a reasonable decision on redundancy pools and ensure any selection criteria are fair and non-discriminatory.
- You should select those at risk of redundancy from each pool applying the chosen selection criteria or process. Where there is a pool of one, or a whole team is at risk of redundancy, there will be no selection process.
- You should write to those selected to inform them that they are at risk of redundancy.
- You should consult individually with those selected for potential redundancy, including discussing how the result was arrived at. You should also consult with these staff on alternatives to redundancy, including alternative roles.
- If an alternative role is available and the terms, capacity or place of work are different to the current role, there is a statutory right to a 4 week trial period.
- If redundancy is confirmed, you should give notice of termination in writing.
- You should give a right of appeal of any redundancy decision.
The right approach to redundancy consultation
Redundancy consultation is by its nature highly process driven and benefits from careful planning and forethought. Be aware however, that a tribunal considering an unfair dismissal claim will consider whether your process and dismissal decision fell within the “band of reasonable responses”. Reasonableness means taking into account both the business reasons of your organisation and the particular circumstances of your staff. This means it is important not to let a pre-determined process and timetable drive your decision-making so that you rush decisions and lose sight of what is fair in all the circumstances.
It is helpful to keep in mind the following general points in your approach to redundancy to mitigate the risks of a claim:
- Be open-minded and prepared to adapt your process and your plans;
- Ensure that plans and proposals are marked “subject to consultation”;
- As far as possible, be transparent and share relevant information early in the process;
- Seriously consider and respond to suggestions raised by staff or their representatives to avoid or reduce the impact of redundancies;
Keep a comprehensive paper trail: keep notes of meetings and set out all decisions and offers of alternative roles in writing.
See part two of the **Wrigleys’ Essential Employment Guide** The Redundancy Process, which looks at pooling and selection for redundancy.
How we can help
Wrigleys employment team have experience helping clients of all sizes to comply with the various rules, regulations and codes that apply to them and their workforce. Wrigleys works with clients by providing them with the advice and tools needed to protect against breaching these requirements and how to deal with problems and breaches, should they occur.For more information about our team, or if you would like to speak with us, please visit our webpage. We would like to hear from you.
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The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.