Letting Go of Staff

The credit crunch has seen queries about redundancy reach the top of the Chartered Institute of Personnel and Development (CIPD)’s legal helpline. Human Resource specialists have now highlighted some of the most difficult problems regarding redundancy for both those new to managing redundancies and those experienced.

1. Do redundancy volunteers or temps count for collective consultation purposes?
Yes. No distinction between the contractual status or length of service of the employees is made by the statutory requirements.

2. Do groups of redundancies occurring in 90 days count as one redundancy?
If the statutory process – consulting for a set period of time with elected representatives, if 20 or more employees are being dismissing within 90 days – has begun and the employer realises that another group of redundancies is necessary, then the 2 groups can be dealt with separately. If the 2nd group involves less than 20 redundancies then the statutory process doesn’t apply. However, if the 1st group involves less than 20 employees but the 2nd totals the number to 20 or more within the 90 days, then the statutory requirements will apply for both of the groups.

3. Where there is no redundancy, are collective consultation requirements applicable?

‘Redundancy’, for consultation purposes, can include a situation where an employer wants to dismiss a group of employees and offer re-employment on new terms to enforce a change to employment terms and conditions. If there is no enforceable mobility clause, relocation could also be covered by the definition of redundancy.

4. What are the penalties for breaching the collective consultation requirements?
For an employer who has failed to follow the collective consultation requirements, up to 90 days’ pay per dismissed employee can be awarded by a tribunal against them. The maximum, 90 day’s pay, is currently awarded to all employees unless the employer is able to illustrate mitigating circumstances that justify a reduction.

5. If an employee refuses to work reduced hours, does it count as a redundancy?
No. ‘Redundancy’ means in most cases that an employer’s staff requirements have reduced, so if an employee is still required to work, even if it is for fewer hours, this is not redundancy. An employee could still be dismissed fairly though for ‘some other substantial reason’.

6. Are the calculations affected by paying in lieu of notice?
Yes. The statutory notice period should be added on to the employees’ termination date before working out if they qualify for a statutory redundancy payment or not, and if so then how much the payment should be.

7. How does maternity pay work?
If redundancy for a woman on maternity leave is inevitable and she qualifies for statutory maternity pay (SMP) by having 26 weeks’ service at the qualifying week, then SMP has to be paid even if she is made redundant before or during maternity leave. Contractual maternity pay, though, is not normally payable beyond a dismissal date unless the contract has a contrary provision. SMP may need to be topped up to equal full pay during the notice period. However, a woman on maternity leave has the right to be offered a suitable vacancy.

8. Is payment due if an employee leaves before a redundancy dismissal?
Employees who, having gained notice of redundancy and resigning early for a new job, don’t automatically lose the right to redundancy payment. However, there should either be an agreement with the employer to vary the dismissal date accordingly, or a written counter-notice given to the employer within the ‘obligatory’ notice period – i.e. whichever is the greater of the contractual or statutory notice period. If employees give counter-notice during the first 4 weeks of a 12 week notice period where only 8 weeks were obligatory, then they might lose their entitlement to redundancy pay.

9. Can notice of redundancy be withdrawn at the last minute?
Notice of dismissal can’t be unilaterally withdrawn once it has been given. The employer should offer the job to the employee who would have to accept the new role, or they should agree to change the dismissal date. There is no obligation for an employee to accept the offer, but an unreasonable refusal of a suitable alternative role may cause the employee to lose their right to redundancy pay.