You will have heard that P&O Ferries fired 800 staff with immediate effect in March. Similarly, technology company Meta and social media giant Twitter have laid of thousands of staff in an attempt to significantly reduce costs. It has been reported that Twitter offices were closed overnight and employees found out whether they were to be made redundant by email en masse – seemingly without any consultation – some having already been locked out of company systems in advance of the company email. This type of approach can open up a company extensive liability, as well as negatively impacting their image, reputation and employee relations. Staff with over two years service have the right to claim unfair dismissal in an Employment Tribunal.
Considering all options prior to restructuring
Ideally all options should be considered prior to proposing redundancies. For example, one US manufacturing company resisted pressure to make redundancies by asking all employees to take four weeks of unpaid leave at a time of their choosing. Using a different approach, AT&T retrained a number of employees whose roles wouldn’t exist going forward, instead of making them redundant and hiring for new skills.
Consulting with staff regarding all options if there is a need to cut costs is a starter for ten in terms of employee goodwill. Some employees may be open to working reduced hours or ’short-time working’ for a period of time, rather than losing their jobs. Laying some staff off for a fixed period of time can also be discussed as another option. However inevitably there will be times when only restructuring can keep an organisation afloat and this may result in some redundancies.
A fair Consultation process avoids unfair dismissal claims
Openness and transparency are key to a meaningful consultation with staff. In order to avoid unfair dismissal claims you need to show evidence of a fair consultation process with staff – a series of meetings at which staff ‘at risk’ are given an opportunity to ask questions and put forward alternative proposals to redundancy. Consultation must include the business rationale for the proposal to make redundancies; the proposed selection criteria; whether volunteers will be accepted for redundancy; and who will be eligible for redundancy payments.
Where a number of staff do the same role and the number of roles available is reducing it is important that a fair selection process is used to determine which employees remain employed. While interviews against criteria can be used as in recruitment, it may be fairer to select staff using a skills matrix and objective criteria such as performance and job knowledge; qualifications; attendance; timekeeping; and disciplinary records. We can provide a skills matrix if this would be helpful.
Collective consultation is required where more than 19 employees are at risk of redundancy. The Department of Business, Innovation and Skills must also be notified at least 30 days prior to the first dismissal (45 days if more than 100 staff are at risk of redundancy). Employee Representatives should be elected if they are not already in post.
Suitable alternative employment
If there are jobs available that are suitable, staff at risk of redundancy should be offered suitable alternative employment and can try a role for a period of four weeks without losing the right to a statutory redundancy payment (if they have two years service) if they decide the role is not for them.
Statutory redundancy pay
Staff with over two years service are eligible to receive statutory redundancy pay which is calculated by reference to their weekly salary (capped at £571 per week) and their age and length of service.
Advice and documentation
If you need to discuss options or are considering restructuring your staff team please get in touch. We can advise throughout the consultation process and provide all relevant documentation.
This post was written by SKHR