Restructuring & Redundancy for Employers
Whilst nothing in life is absolutely guaranteed, the same can be said for businesses. As such, there are times when economic difficulties can lead to businesses having to make difficult decisions in respect of their work force. It can lead to interim processes such as lay offs or short time working or more permanent processes such as redundancy. If you have been affected by any of these issues, we have an experienced team who can provide robust and commercial advice in this respect.
What is redundancy?
Redundancies can occur in three ways:
- Where your business closes in its entirety.
- Where your place of work closes – this can be one site or numerous sites.
- The business requires less people to carry out work of a particular nature.
Selection for redundancy
If you are looking to make savings in relation to your business, you will need to make a decision as to which employees are at risk, in which departments etc. If you are removing an entire class of employee, or employees who carry out unique roles, this is classed as a self-selecting redundancy. If, however, you are simply reducing the number of employees who carry out a particular role, then you will need to carry out a selection process. This involves pooling employees who carry out the same or broadly similar work and scoring them against objective criteria. Each employee would then be given a particular score and those normally with the lowest scores are then provisionally selected for redundancy. Be aware that employers should no longer operate the concept of “last in first out”, neither can they discriminate in the selection of employees for redundancy.
Once you make the decision to implement a redundancy exercise, you have a duty to consult with employees. If you are proposing to dismiss up to twenty employees for redundancy, you can simply consult with employees on an individual basis. These consultation meetings should normally give employees the right to be accompanied and will talk about the rationale behind the redundancy, any selection process involved, any alternatives to redundancies should be proposed redundancies go ahead, and whether there is any suitable alternative role that might avoid or mitigate any redundancies.
If you are proposing to dismiss twenty or more employees as redundant (but less than one hundred), then you would be obliged to collectively consult which includes sending a HR1 form to the Insolvency Service. This means consulting with both the individual employee but also with any recognised trade union and/or elected employee representatives. However, the same points are discussed during collective consultation meetings as they are with individual consultation meetings.
As part of any fair redundancy process, an employer is under a duty to make employees aware of any suitable alternative roles which could avoid or mitigate redundancies. Whether a role is suitable is down to the employee. That said, if an employee unreasonably refuses an offer of a suitable alternative, then you can reasonably withhold their statutory redundancy payment.
How do you calculate a statutory redundancy payment?
In order to qualify for a statutory redundancy payment an employee requires a minimum of two years’ qualifying service, but if they are able to meet this criteria, they are entitled to a statutory redundancy payment which is worked out on the basis of age, length of service and gross weekly pay (currently capped at £571 per week). It may well be that you also enhance redundancy payment, however, there is no automatic requirement that you do so, but if you did it should be in return for the employee entering into a settlement agreement.
How can we help?
We can make sure you comply with the obligations imposed by legislation, whilst at the same time balancing commercial considerations. We can help manage workforce relations, identifying selection pools and the application of selection criteria as well as advising on internal communications e.g. Questions and Answers. We can also assist with the process of individual and collective consultation meetings and produce all associated documentation.