Redundancy is regrettably an issue which affects many businesses, particularly in the wake of the current pandemic. Whilst redundancy is never an easy option, it can in a number of situations mean the difference between a business that can continue to trade and survive and one that fails. In the current challenge business climate it remains an option that needs to be considered. In order to assist members when considering what steps, if any to take we have therefore produced this quick guide.
What is the Process?
The processes to follow in the UK are very clearly divided between collective redundancy situations (where an employer is proposing to dismiss 20 or more employees in a 90 day period at any given establishment) and other procedures to follow, where less than 20 employees are being made redundant.
We cannot deal with the requirements of collective redundancies easily in this article. If you are making 20 or more employees redundant in any 90 days period we advise you seek advice at an early stage.
The processes to follow for non-collective redundancy also vary depending on whether or not the job role is in a unique position, or whether there are pools of selection to apply.
Where you are losing one or more employees from a pool doing same/similar work a broad overview of the procedure is as follows:
- Hold a group meeting. Explain to the employees the business reasons behind the proposal, explaining no final decisions have been made on whether or not to go ahead and explaining if it does go ahead you propose to devise a matrix and consult with them on that before making any decisions. You can invite volunteers to avoid compulsory selection (albeit you don’t have to accept volunteers). Make sure you have considered alternatives to redundancy of employees before progressing.
- Send a detailed letter to all documenting the above and setting up individual meetings with them all in say at least 2-3 days’ time so you can listen to any suggestions, ideas or proposals they may have to avoid potential redundancy situation.
- Hold the above meetings listening and genuinely consulting.
- If you decide to go ahead write to them explaining why and summarise how and why the suggestions from consultation do not change the proposal. Explain that the next stage is for you to devise a matrix which you will score them. Try to make the matrix based on objective factors such as discipline record, performance, skills etc.
- You consult with them on the proposed matrix and proposed weighting of that matrix (note you have not actually scored yet, you are simply consulting on the proposed categories for scoring). This again would take 2-3 days.
- If there are no suggestions that change the matrix then confirm the same, ideally two managers then ahead and independently score those employees against the records using the set criteria/scoring system.
- The employees are then written to with their provisional scores. The employees with the highest scores can be told that the provisional scores mean they are not selected, however you are consulting with the other employee/s so this may yet change.
- The employee who has the lowest score is written to and his/her scores are disclosed. He/she is invited to a meeting at which the reasons for the scores are explained and he/she can put forward representations before you make any final decisions. Explain in the letter that if the scoring doesn’t change then he/she may be given notice of redundancy following the meeting.
- Hold the above meeting.
- After the employee’s representations make a final decision on his score if he is still selected then write to them with the decision and the right of appeal. Clearly there should be another equal or more senior company manager/director who is free to hear the appeal who has not been involved in the consultations above.
- If the employee appeals hold an appeal meeting and write afterwards with the decision.
It is strongly advised that all meetings should be minuted. It is also good practice, albeit not a legal requirement, to allow an employee to be accompanied by a Trade Union rep or a work colleague to the final meeting before notice of redundancy is given;
With all redundancies you are under a continuing duty to look for alternative employment and therefore if any alternatives arrive during the consultation process or (arguably) what would be the dismissed employee’s notice, then you are under a duty to offer any vacancies to them, or at least offer the chance to apply for the vacancy -depending on the facts. Alternative employment should therefore be continually reviewed and assessed at the above meetings;
- All consultations must be genuine, with a view to seeking agreement.
- Special considerations apply for women who are pregnant and on maternity leave, when extra care should be taken;
- There are statutory rules relating to offers of alternative employment and how they affect redundancy pay. Seek advice if in this situation;
- Length of service can be used as a factor on a matrix but not advisable where selected employee might be younger/older than others;
- Seek advice if anyone has a long term health issue which affects their attendance or performance as there can be risks of disability discrimination in selection criteria.
In situations where employees have well below two years’ service the procedure may be slightly easier / truncated, but selection can still be argued to be for automatically unfair reasons for all employees, regardless of length of service, hence the need to have good process demonstrating fair and objective selection;
The above is just an overview and matters can take different turns depending on the pool and the consultations, and will need to be tailored to any one particular situation.
Given that redundancy processes often end in dismissals, and such dismissals are often mass dismissals, it is also an area in which our members would be advised to call our legal helpline for further assistance. Given that redundancy processes often end in dismissals and such dismissals are often mass dismissals. As an RMI member you have access to a range of useful templates to assist in redundancy processes.
Motor Industry Legal Services
Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advise over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.