Posted on 25.6.15 by David Walton
Redundancies at established businesses seem to be cropping up in the news with more and more frequency. Recent cases that have hit the business news have included proposed mass redundancies at Aviva, Müller, Boots and Hovis.
Many businesses are still reeling from the crippling effect of the worst recession to hit our country since the Second World War, whilst others are now trimming their financial out-goings as they slowly grow and tentatively progress and return to profit once again. Either way, many people are sadly losing their jobs and with further drastic cuts still to come, particularly to the public sector, the trend may be set to continue.
Broad Types of Redundancy
For an employer, a genuine redundancy situation must exist for them to justify redundancies. Reasons may be that the organisation is to be closed or relocated, or that there is a reduced requirement for employees to carry out work of a specific kind.
There are broadly two types of redundancy: compulsory and non-compulsory (or voluntary).
Voluntary redundancies are often used as a way for an employer to ensure that the least damage is done to workplace morale or indeed to minimise potentially more contentious and risky losses. Most of the time, a voluntary redundancy situation is more beneficial for all parties involved. Employees are not at the mercy of an axe-swinging boss who systematically chooses which people are to lose their job; instead employees who may have been thinking of leaving their job can come forward and offer to leave voluntarily whilst at the same time benefitting from a monetary settlement, which is usually larger than normal to add incentive for people to come forward to volunteer.
Compulsory redundancies occur when an employer needs to reduce numbers and either voluntary redundancy isn’t an option or nobody has previously come forward when it has been offered. On the surface, voluntary redundancies may seem like a great idea, however, it may not always be feasible either financially or in terms of the flexibility of allowing any volunteer to leave. If compulsory redundancies are necessary it is vital for an employer to undertake consultation with staff and ensure ways in which redundancies can be avoided are explored and exhausted, and to apply an appropriate selection criteria, where there is a pool of staff affected. Equally, an employer must not discriminate against any particular groups, whether it is pregnant women, disabled staff, employees of a specific religion or any other potentially protected group in how any redundancy process is affected.
If employees and/or their representatives are not consulted in a redundancy situation, any resulting dismissals will almost always be considered as unfair and could be taken to an Employment Tribunal. Employers must also follow the rules of ‘collective consultation’ if they are making 20 or more redundancies within any 90 day period. Consultation must be made at least 30 days before the first dismissal takes effect if 20 to 99 employees are to be made redundant and at least 45 days before if the redundancy involves over 100 employees. Employers may wish to take legal advice before deciding on what consultation plans they intend to follow.
Before engaging in any such consultation process, employers must establish:
- How many redundancies are to be proposed
- Create an appropriate pool of employees
- Create and apply an appropriate selection criteria
- Create a suitable list of alternative vacancies
If voluntary redundancies are made available, employers may consider offering any volunteer employee a settlement agreement. If agreed, the benefit of a settlement agreement to an employer is the certainty of knowing there will be no dispute or claim afterwards. A settlement agreement is a legally binding contract that will set out the full terms of an individual’s departure for their employment. It will set out exactly how much money is to be paid and provide the obligation as the employee not to bring a claim against the employer once their employment has been terminated. A settlement agreement can also cover off such issues as restrictions on future activity, dealing with employer property and references.
It is essential, and also a legal requirement, that any settlement agreement is looked at and signed by a qualified professional, most commonly a solicitor. It will only become legally binding once this has happened. An employment solicitor will ensure the employee is fully informed of the right that they are signing away and the value in such rights. This is beneficial for both parties.
It is important to note that an employee is under no obligation to sign a settlement agreement.
What Gorvins Can Do for You
As an employer it is vital for you to get any redundancy process right. If you get it wrong, there is no going back and you will open yourself up to the potentially costly and damaging unfair dismissal claims. Seeking advice from a knowledgeable solicitor will help you avoid unnecessary problems further down the line. If you are considering making any employees redundant, Gorvins and our excellent employment team can give you that much needed legal advice, making the process much easier and more manageable.
For an employee our expert and personable employment solicitors will ensure you are getting a fair deal if you have been presented with a settlement agreement, and otherwise that your employer is going through all the necessary steps expected in a fair redundancy process. Our team are here to offer an unrivalled service and expert advice.
If you have any employment queries please contact us on 0161 930 5151 (included in free mobile minutes or charged at local landline rates). You can also contact us by email – email@example.com.