7 Redundancy Myths Exploded! Answers to Questions from Business Leaders

6/11/2014

exploding_myths_of_redudancy

 

For most of us making staff redundant is a last resort and is always an uncomfortable time - for those affected, managers and people in the team.

While it seems that greater flexibility in the workforce has reduced the numbers of people who have been impacted by redundancy in the last downturn, redundancies have still been a feature of the landscape. This has given rise to regular calls to our helpline, and those calls are often characterised by myths and misunderstandings about an employer’s responsibilities when having to reduce the workforce.

So here’s the answers to some of the myths and misunderstandings that Vistage members call my team at Paradigm Partners about:

1. Do I have to give 30 days’ consultation?

Not usually in the SME sector. If there are less than 20 people being made redundant over a three month period, there is no statutory minimum period of consultation. Nonetheless in order to be seen as reasonable, employers are required to consult, consider any alternative work if there is any, and apply fair and objective criteria if they have to select employees from what is usually called a ‘pool’.

It is unlikely that a Tribunal will regard consultation that is completed in less than two weeks as reasonable, but it is possible.

2. I want to reappoint to a post I made redundant, do I have to wait three months?

This type of situation often arises when too many people have been made redundant, or business recovers more quickly than expected. Providing that the circumstances have not been contrived, you will usually be safe to reappoint and there is no need to wait for three months, or even to offer the role to the original employee.

However, this sort of thing can cause alarm if redundant employees find out and this is where the three month timescale comes in. Generally, ex employees have three months to lodge an Employment Tribunal claim. For that reason, some employers prefer to take a cautious approach, and not reappoint until the three months has elapsed.

3. Can I make an employee who is pregnant or on maternity leave redundant?

Yes, but note that the law says that you cannot select them for redundancy because they are pregnant or on maternity leave. Put simply, you cannot decide that an employee is to be made redundant because they are off work, or likely to be off work anyway.

You will remain responsible for any maternity pay, so this, and nervousness about the possibility of a discrimination claim, often leads to employers waiting until an employee returns from maternity leave before they do anything.

4. Do I have to tell all staff about the possibility of there being redundancies, even those unlikely to be affected?

No, there is no requirement unless it’s a ‘collective redundancy’ (20 or more employees) situation where you are required to consult all those ‘affected’, and this may be a wider group than just those who may be dismissed because of the redundancies. For instance, there may be others whose duties will be changed.

Wider briefing may be worth doing though! If you do not give information about the situation to everyone, the office rumour mill will fill the gap you have left. Also, involving others, may lead to solutions that work better for the business than redundancies.

5. Can we just get rid of the people who don’t have the ‘qualifying service’ to claim unfair dismissal?

Employee’s with less than two years’ service cannot go to an Employment Tribunal and complain about ‘unfair dismissal’ and that is the sort of claim that most people make if they think they have been made redundant unfairly.

On the surface, it would therefore look to be an attractive option to dismiss those with less than two years’ service, particularly as historically ‘last in first out’ (LIFO) was an accepted way of deciding who should go.

Life is no longer that easy. Choosing employees because they have less than two years service will not result in an ordinary unfair dismissal claim, but may well give rise to other claims such as age or sex discrimination.

6. We want to let a long standing employee go, so we’re going to call it a redundancy?

This is a frequent question, often asked with good intentions. A loyal employee whose performance has deteriorated is made redundant so that they can go with a redundancy payment and their dignity supposedly maintained.

As a tactic, this can succeed, but it is not risk free. The danger is that the dismissed employee asserts that the redundancy was not genuine, and that the real reason they were dismissed was their performance.

If this argument is accepted by a Tribunal, the employer is going to find it difficult to show that the procedure they undertook was reasonable for a performance related dismissal. The reality will have been that the redundancy was just a way of avoiding what may have been a longer and more tortuous procedure regarding the performance.

7. Is there a minimum number of meetings that have to take place as part of the consultation process?

No, even in a larger ‘collective redundancy’, there is no minimum number of meetings. My checklist (available below) on handling small scale redundancies suggests three, but in many instances an initial meeting to outline the circumstances, and a follow up for further discussion and confirmation of the outcome will suffice.

Remember though, that you will need a paper trail to demonstrate that there clearly was a reasonable period of consultation. So, notes on meetings and written invitations will all be useful.

Conclusion

Handling the downsizing of a workforce is usually a ‘moment of truth’ in the life of an organisation. How you handle it will be watched by everyone. It will be just as important to the ‘survivors’ as it will be for those who are leaving the business, that people are treated fairly. So, investing time in doing it properly will have a long term payback.

It is not just a matter of being legally compliant, it is a potent demonstration of the underlying values that drive your business, and the impact will be long lasting.

The good news is that when it comes to being legally compliant when making people redundant, the law is much more flexible than we imagine.

Despite the flexibility, however, I’m afraid I have to have a disclaimer – no blog on legal matters is complete without one!

This blog does not constitute legal advice, and should not be a substitute for seeking professional help on individual cases. Sorry about that folks!

Download the checklist:

redundancy_checklist_guide

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Topics: Business, HR