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Avoiding The Redundancy Pitfalls

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By Rebecca Lake

Many employers have made redundancies recently or are contemplating doing so.  In this article, Rebecca Lake, an associate in our Employment Department, highlights three of the most common pitfalls experienced by employers in redundancy situations and the penalties attached, together with some practical tips for avoiding them.

1.  Procedure

What procedure needs to be adopted by the employer is determined by the number of employees that are likely to be made redundant.

If the number could reach 20 or more at one site within a 90 day period, employers must follow the statutory collective consultation procedure.  Key requirements include the election of employee representatives and notifying the projected redundancies to BERR (Department for Business, Enterprise and Regulatory Reform) 30 or 90 days before any redundancies are made (depending on numbers).

Failure to adhere to these rules allows each affected employee to apply to the Employment Tribunal for up to 90 days’ gross pay, in addition to any unfair dismissal claims.  

When doing your sums, remember not only to look forward 90 days but back 90 days too.  Any redundancies made in the previous 90 days will also count towards the 20 employee threshold.

If contemplating making 19 or less employees redundant at one site within a 90 day period, employers must adopt the three step statutory dismissal procedure. Failure to do so may result in an automatic basic award of four weeks’ capped pay and an uplift of 10 – 50 per cent on the compensatory award.

2.  Selection criteria

A really tricky element of redundancy exercises can be devising fair criteria to select one or more employees from a pool.

Frequently, the selection criteria chosen by the employer are subjective rather than objective, performance being a prime example. They should also try to add some objective criteria into the mix (e.g. attendance, disciplinary record, length of service).  If using subjective criteria, try to collate evidence to support any score awarded, such as appraisals or staff and client feedback.

If the business does not have ‘objective’ evidence to support a poor performance score, why not ask two people to independently score individuals?

3.  Consultation

A common reason for successful unfair dismissal claims in redundancy exercises is either that the employer has failed to consult at all with employees, or that the consultation is a ‘box ticking’ exercise, undertaken after a decision has really been made.

To avoid this, the language used during the consultation process should reflect the fact that no final decision has been reached.   For example, ‘proposals’, ‘potential’, ’possible’, ’preliminary’ all give the impression that it may be subject to change.

If you need to complete consultation quickly, consider giving affected employees additional paid holiday to focus their attention full time on the proposals during consultation.

© Davenport Lyons 2009. All rights reserved.

This document reflects the law and practice as at January 2009. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.


About the Author

Davenport Lyons [www.davenportlyons.com] is an international business law firm based in the West End of London. The firm has an excellent reputation in areas spanning corporate to property, defamation to intellectual property, music to film finance and digital rights to sport.


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Article Published/Sorted/Amended on Scopulus 2009-03-26 01:14:35 in Legal Articles

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