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Overview
Denton-Jones, Anna - Refreshing Law Ltd
Overview

Key points

  • A redundancy situation can exist where business, or part of it, is shut down completely, shut down at a specific location (even if moving to a new location) or the requirement for employees to do work of a particular kind has reduced or come to an end.
  • There are numerous legal claims employees might bring in relation to redundancy, which is why it is important to plan all redundancy exercises carefully.
  • There is a duty to consider if there are alternative measures to redundancies that could be implemented.
  • If you propose to dismiss between 20 and 99 employees within 90 days or less, the obligation to notify the Redundancy Payments Service on Form HR1 is triggered. Whether this has to be done 30 days or 45 days before dismissals take effect will depend on how many employees are involved.
  • Employers are required by legislation to inform and consult with 'appropriate representatives' of any employees who may be affected, where it is proposed to dismiss at least 20 employees at any 'one establishment' within a period of 90 days or less.
  • Where fewer than 20 redundancies are proposed, you are not required by statute to consult collectively, but it is worth considering doing this to assist in showing a fair procedure has been followed for the purposes of the unfair dismissal regime.
  • 'Appropriate representatives' are either recognised trade union representatives (where a union is recognised) or representatives elected by the potentially affected employees in an election.
  • There are minimum periods for collective consultation. When it is proposed to make between 20 and 99 redundancies consultation must begin at least 30 days before notice of dismissal is given. Where 100 or more employees are affected this is increased to 45 days.
  • The consultation clock doesn't start ticking until certain information has been given to the appropriate representatives in writing.
  • Consultation needs to take place when the plans are at a sufficiently formative stage that the employees can influence the process. It should include discussions about ways to avoid dismissals; ways to reduce the number of employees being dismissed; and ways to mitigate the consequences of dismissal on the affected employees.
  • Avoid telling any employees they are 'safe' unless their category of employee is completely unaffected.
  • You will need to define the method of selection, unit for selection and selection criteria you intend to use. You have considerable freedom to frame the redundancy process in the manner which works for you provided that it falls within the 'range of reasonable responses of an employer'' and you can justify why you have chosen a particular methodology.
  • Individual consultation should take place in all cases.
  • Avoid issuing notice of dismissal before both the collective and individual consultation periods have closed. All redundant employees will need to be given appropriate contractual or statutory notice to bring their contract of employment to an end.
  • Throughout the redundancy process, and during any period employees at risk of redundancy are working out their notice, an employer has a duty to consider alternative employment opportunities for them.
  • Once notice has been issued, the employee has the right to reasonable paid time off to look for work or undertake training.
  • All selected employees have the right of appeal against selection.
  • Any employee with two years' service at the date of termination of their employment by reason of redundancy will be entitled to a statutory redundancy payment. This is calculated with reference to their length of service, age and weekly pay, in line with a statutory formula.
  • Employers often make payments in excess of the statutory redundancy pay scheme. These enhanced schemes may be contractual or become contractual as a matter of custom and practice.
  • Redundancy payments are tax free up to £30,000.

Recent developments

Redundancy and the 2020 coronavirus outbreak

Many organisations may need to implement a temporary redundancy, or lay-off situation, as a result of the coronavirus outbreak. They should remember that eligible employees who are laid off for a period of four continuous weeks, or six weeks in total in a 13-week period, will be entitled to claim statutory redundancy pay. 

On Friday 20 March, the government announced its plans for financial assistance to help organisations retain employees for an extended period of time, despite offering no work, and avoid lay-offs. Organisations are able to obtain a grant from the Government to cover a portion of furloughed employees’ wages. 

It is called the Job Retention Scheme and more information can be found in our FAQs. 

8 July 2020 update

On 8 July, Chancellor Rishi Sunak announced a Job Retention bonus available to employers who retain furloughed staff until January 2021. This is to prevent redundancies as the furlough scheme is wound down towards the end of October. Staff must be brought back to do 'proper work' and earn at least £520 per month. Please refer to our in-depth section for more information. 

3 August 2020 update

From 31 July, furloughed staff who are made redundant need to have their redundancy pay calculated based on their normal wage, rather than the reduced furlough payment. Please click here for more information. 

24 September 2020 update

On Thursday 24 September 2020, Chancellor Rishi Sunak confirmed that the Job Retention Scheme is to end on 31 October, to be replaced by the Job Support Scheme from 1 November. Please click here for details. 

Protection against redundancy to be extended for new parents

Following a consultation, the government has confirmed that redundancy protection for new parents will be extended. Currently, those on maternity leave who are at risk of redundancy must be offered suitable alternative roles in advance of others. This protection ends once the employee returns to work.

Furture changes will mean that this protection starts from the date the employee informs her employers that she is pregnant, whether verbally or in writing, and will last for a further six month period once the employee returns to work.

The extended protection will also be available to those on adoption leave and shared parental leave, although further guidance will be released on how this works due to the differences in the shared parental leave scheme.

The date these changes take effect has not yet been confirmed. More information can be found in our news article.

A redundancy situation exists where:
  • You shut down a business or part of it completely
  • You shut down at a specific location (even if you are moving to a new location); or
  • Your requirement for employees to do work of a particular kind has reduced or come to an end.
It is important to note that the ending of a fixed-term contract (FTC) can be a redundancy situation (Pfaffinger v City of Liverpool College [BAILII]) although it is not likely to be a redundancy if the FTC was a temporary one to cover someone else's absence and that person is returning to work (Greater Glasgow Health Board v Lamont [BAILII]). It will depend on the facts of the case and is likely to turn on why the fixed-term contract is not being renewed and whether that relates to individual choice or a business decision.
 
An employer's proposal to make changes to terms and conditions of employment is also a redundancy situation (GMB v Man Truck). This is because the employer will have to terminate the existing terms and conditions of employment, offering the new terms as alternative employment, if agreement cannot be reached with the staff.
 
Importantly if a position is replaced it cannot be a redundancy situation.
 
You may have an express 'mobility' clause entitling you to require employees to move location. If you rely on such a clause, then the situation will not be a redundancy situation.
The main legal claims that an employer in a redundancy situation might face are for:
  • a 'protective award' where the employer has failed to consult collectively with employee representatives: this award starts at 13 weeks pay (actual pay not the statutory capped sum of a week's pay) per affected employee and a Tribunal will only reduce that figure where it believes there is a good reason to do so. Such claims can be brought by the employee representatives until three months after the last dismissal.
  • unfair dismissal: any employee with two year's service can bring a claim. Those with less the appropriate length of continuous service can bring a claim where they believe the reason for their selection for redundancy was unlawful (perhaps on the grounds of discrimination or because they were pregnant or on maternity leave or because they acted as an employee representative). Claims can result in a basic award which is calculated in the same way as statutory redundancy pay and a compensatory award which is based on the employee's financial losses up to a maximum of £88,519 from 6 April 2020. 
  • discrimination on the grounds of sex, sexual orientation, race, ethnic origin or nationality, religion or belief, age, disability or on the grounds of being a part-time worker or employee on a fixed-term contract: In the redundancy context, it is unlawful to select candidates for redundancy on these grounds or to treat them differently on these grounds. In particular, care needs to be taken to ensure that any selection criterion used do not have the effect of treating a particular group less favourably.
  • an injunction to prevent you from breaching a collective agreement: trade unions are most likely to bring such a claim, arguing that there is a binding agreement dictating how a redundancy situation should be dealt with that you should honour. Such an action would be brought through the courts.
  • statutory redundancy pay: Employees with two years' service are entitled to a redundancy payment based on their age, length of service and their weekly pay (up to a maximum of £538 from 6 April 2020). Such claims can be made for 6 months following the dismissal. The maximum payment is currently £16,140 from 6 April 2020 (for historic rates, please see our ‘Statutory rates’ page).
  • contractual redundancy pay: If you have promised to pay an enhanced payment to employees, this contractual entitlement can become binding as a matter of custom and practice.
To avoid these legal risks, careful planning of any redundancy exercise will be required.
There are various steps that will need to be considered in any redundancy exercise. These are:
  • careful initial planning and preparation
  • considering if there are alternatives to redundancies
  • notification to the Department of Business Innovation and Skills on form HR1 if there are to be more than 19 employees affected
  • collective consultation will be required in all cases where more than 19 employees are affected, but should be considered even in smaller exercises
  • statutory duties to consult and inform appropriate representatives of affected employees
  • the method and unit to be used for selection along with the selection process
  • individual consultation will be required in all cases
  • ending the contract of employment through the proper use of notice or payment in lieu of notice
  • the payments that will be due to any employees who are made redundant
  • offering a right of appeal to anyone who is selected for redundancy.

The planning stage in a redundancy exercise is crucial. You should consider all the issues dealt with in this topic and give particular consideration to:

  • defining why redundancies are necessary
  • preparing a timetable for the steps that will need to be taken, when they will be taken and by whom
  • preparing in advance the draft documentation you will need at each of these stages and ensuring at all times that such documentation is securely stored and kept confidential
  • checking in advance all affected employees' contracts of employment and other details, for example as regards length of service, notice periods, whether you have the right to make a payment in lieu of notice, the employee's age and their salary and benefits packages
  • explaining to managers the legal timescales involved. For example a large scale (more than 100) exercise will involve a 45-day consultation period and a notice period of up to 12 weeks depending on the terms of the contracts of employment, plus time needed for elections of staff representatives. The process can take around 5 months in total and even a single redundancy involving just one post will take a few weeks to handle fairly
  • lining up your team, for example payroll, lawyers, accountants, outplacement consultants, job centre and so on (you may have to wait until after the initial announcement is made for reasons of confidentiality)
  • whether you have got employee representatives in place to consult with in the case of collective consultation or you need to build in an election process
  • managing the human element. Redundancies invoke many emotions and you must be prepared that even the most skilled can find it hard to make the announcement or sound genuinely concerned when what they have been told to say is scripted. They will go 'off script' and you will have to be prepared to clarify things. A 'frequently asked questions' document for managers may help to keep them 'on message'
  • the strategies to be put in place for those who are left who will need clear leadership and direction; and who at a senior level you will keep free for the appeal stage so there can be no allegation of prior involvement.
You should consider if there are alternative measures that could be put in place to reduce the need for redundancies. These might be:
  • introducing a freeze on recruitment
  • reducing overtime
  • reducing the use of temporary workers
  • re-training employees into other areas (redeployment)
  • reducing sub-contracting
  • temporary lay-offs or short-working (more information can be found on our employment law pages)
  • changing terms and conditions such as a wage freeze, wage cut, reduction in bonus or pension contributions.
As part of the consultation process, you will need to discuss these alternatives with staff. You should not assume that staff would not be willing to consider alternatives to redundancies.
If you propose to dismiss less than 20 employees within any 90 day period (or less) there is no requirement to notify the Department of Business, Energy and Industrial Strategy on Form HR1.
 
If you propose to dismiss between 20 and 99 employees within 90 days or less, the obligation to notify is triggered 30 days before the first dismissal takes effect.
 
If 100 or more employees are to be made redundant within any 90-day period or less, notification should occur 45 days before the first dismissal takes effect.
 
If redundancies take effect in blocks, say 70 employees are to be made redundant and a further 35 are to be made redundant more than 90 days later, the requirement to notify will be separate. In such a case two forms HR1 would be lodged in each case 30 days before any dismissal takes effect rather than 45 days for the total of 105 redundancies.
 
When counting the number of employees to decide if the threshold for collective consultation is met and how long you will need to consult for, you do not need to count employees whose fixed term contracts are coming to an end at the time they were originally intended to (Trade Union and Labour Relations (Consolidation) Act 1992 Amendment Order 2013).
 
Failure to comply with this obligation is a criminal offence punishable by a £5,000 fine.
 
Much of the information required on the form is the same as required when commencing collective consultation.
Employers are required by the Trade Union Labour Relations (Consolidation) Act 1992 (as amended by various subsequent regulations (TURLCA)) to inform and consult with 'appropriate representatives' of any employees who may be affected, where it is proposed to dismiss at least 20 employees at any 'one establishment' within a period of 90 days or less.
 
The requirement to consult collectively may arise in circumstances where there is a transfer of an undertaking and the organisation that is receiving the transferring employees wishes to commence doing so before the transfer. If this is the case, the existing employer will need to agree to get involved in this (see 'Consulting employees on Tupe').
 
Where fewer than 20 redundancies are proposed you are not required by statute to follow this process. As a matter of good practice, however, it is worth considering following the guidelines set out in law where you are contemplating multiple redundancies as consulting collectively for a couple of weeks will assist in showing a fair procedure has been followed for the purposes of the unfair dismissal regime.
 
Individual consultation will also be important in all cases.
'Appropriate representatives' are either recognised Trade Union representatives (where a union is recognised) or representatives elected by the potentially 'affected employees'. Thus, if you have a recognised trade union, you must consult with it. If none exists or there are any staff affected in respect of whom there is no recognised representative, you may consult with an appropriate 'standing body' such as employee representatives who have been elected to an information and consultation body or staff forum which has the mandate to deal with redundancy situations. If no such body exists (a staff social committee, for example, would not have the appropriate mandate) an election would have to take place. When deciding if an existing body is 'appropriate' it will be important to consider if it has the authority of the employees affected and whether it has the powers to enable it to consult effectively.
 
Only if all the employees declined to elect representatives would you be free to consult directly with the employees themselves.

It is the representatives of 'affected employees' who must be consulted. 'Affected employees' are not limited to those individuals whose jobs are directly affected. They could also be those who remain in the retained parts of the organisation who will be indirectly affected if the proposed redundancies occur. This may be because their duties will inevitably change or they will report to different people or work alongside different people. It is, therefore, crucial to look at a proposed redundancy situation in context and to look beyond the jobs which are to be lost. If a management position may be redundant, consultation with a whole team may be necessary in order to be fair to all concerned.

The statutory periods of consultation set out in s188 Trade Union Labour Relations (Consolidation) Act are as follows:
  • where you are proposing to dismiss 100 or more employees within a period of 90 days or less, at least 45 days before issuing notice; and
  • where between 20 and 99 redundancies are proposed, consultation must begin at least 30 days before issuing notice. However, these periods are a minimum. The statute states that 'consultation shall begin in good time'.
UK case law suggests that consultation should begin when redundancies are 'proposed' as compared to the EC approach of when they are 'contemplated'. The key to the word 'proposal' is that the plans are still at a formative stage when representations from employees can result in changes.
The requirements involve you calculating how many redundancies will take place at any 'one establishment'. There is no statutory definition for this and it will depend on the facts of the case but it is not restricted to simply the place of work. For example, a parent company has two subsidiary companies and proposes to relocate their head office functions to one new location. In total there are 120 employees; about 70 in one company and 50 in the other. As individual companies they have less than 100 affected employees so arguably they need only consult for 30 days. However, the case law shows that where those two companies are actually run together (in some cases managers work in both, with invoicing and other functions actually being done as one company) really the two are 'one establishment' so 45 days should apply.
 
One example could be sales teams which operate across the nation – they may well be deemed to be an 'establishment' rather than them being allocated to a particular office base if they are managed as a unit.
 
There is a risk that if an Employment Tribunal determines that consultation has been inadequate it will rule on the 'establishment' point in the employee's favour. It can be safer to treat two sites as one establishment if there is any doubt.
 
Case law in this area has developed around the closure of the Woolworths and Ethel Austin stores. In those cases, each shop was treated as a separate establishment. The UK courts have been considering how the UK law fits alongside the EC law and have ruled that whenever an employer is proposing to make more than 20 employees redundant, their location becomes irrelevant: thus the Woolworths staff should have been consulted, even where an individual store had fewer than 20 employees. The sands may shift again but for now it is safer to consult collectively even if your redundancies are geographically separate.
Where a rolling programme of redundancies takes place, you will have to take care to ensure that you do not fall foul of the requirements to consult collectively. For example, if you are only proposing to make 10 people redundant there is no need for group consultation. If, however, within 90 days, you propose a second wave of redundancies affecting a further 12 people, you will have reached the '20 or more' threshold and be obliged to follow the statutory procedures. This would effectively mean starting consultations again for the first group of employees.
 
It is worth noting that the duty to consult relates to the proposal to dismiss and not the actual dismissal. Therefore, it is the date on which the employer proposes that the first dismissal will take effect that is the key date and not the date on which the employees actually leave. Consequently, the consultation period will not be affected if staff leave before the proposed date, for example if they volunteer for redundancy, or if the process gets delayed. Also, it cannot be said that there is a proposal to dismiss employees who have already left. If the employees are working their notice, you are still proposing to dismiss them in which case they would count towards the total which could trigger collective consultation for a second wave of dismissals.
 
If the Employment Tribunal felt the figures had been deliberately massaged in order to avoid consultation they would look very closely at the circumstances.
The consultation clock doesn't start ticking until certain information has been given to the appropriate representatives in writing as dictated by s188 of the Trade Union Labour Relations (Consolidation) Act. The information required includes:
  • The reason for the proposed redundancies
  • The number and description of employees proposed for redundancy
  • The total number of employees of any such description employed at the establishment(s) in question
  • The proposed method of selecting the employees who may be dismissed
  • The proposed method for carrying out the dismissal; and
  • The proposed method of calculating any redundancy payments i.e. a statement that statutory payments will be made or that a contractual scheme will apply.
  • The number of agency workers you have under your supervision and control, where they are working and the type of roles they are performing for you.
It is normal for this information to be given in a letter and this letter triggers the start of the 30 or 45 day period for collective consultation.
Fair consultation will involve giving the affected employees a fair and proper opportunity to fully understand and consider the matters they are being consulted on and to discuss any concerns or express their views. You must be willing to take on board their representations and perhaps amend your proposals to show that you have done so. Ultimately, you are not required to accept any suggestions made by staff but evidence that employee concerns have been addressed will always assist you in any Employment Tribunal proceedings that are subsequently brought.
 
Consultation must be a genuine exercise. For that reason it would not be appropriate to issue notices at the beginning of consultation as it suggests that the employer's mind is made up. The statute refers to 'consultation with a view to seeking agreement' which suggests the consultation process should begin before drawing up definite redundancy plans. The case of Middlesborough v TGWU [2001] [BAILII] shows that consultation should commence about ways to avoid dismissals before the decision to make compulsory redundancies has been reached. Although redundancies may be the ultimate outcome, you should not be closed to considering alternatives. The Middlesborough case shows that it is not open to you to argue that consultation would be futile or 'wouldn't make any difference'.
 
In 2007 the Courts reversed previous case law and found in UK Coal Mining Ltd v NUM that there is a duty to consult over the reason for making redundancies in the first place. This suggests that the appropriate representatives can challenge an employer's decision making process and argue that redundancies are not necessary.
 
It is a statutory requirement that the collective consultation must address the following:
  • ways to avoid dismissals
  • ways to reduce the number of employees being dismissed; and
  • ways to mitigate the consequences of dismissal on the affected employees.
You should also consult about the proposed method of conducting the redundancy process. If staff have agreed to the process you are following it will be harder for them to criticise it later.

If you do not have trade union representatives or other employee representatives in place, it is essential that staff have the opportunity to elect employee representatives to discuss proposals to make redundancies following these guidelines:

  • all employees, at all levels, in the affected groups must be given the opportunity to stand for election
  • all employees who indicate that they wish to be candidates in an election should be included on a ballot paper to be forwarded to all affected employees
  • you can choose the total number of employee representatives to be elected but need to ensure that the interests of the employees can be properly voiced. At least one representative from each affected department or part of the organisation should be included but you may need to increase the number to ensure an adequate cross-section of staff are covered
  • you can choose if the employee representatives will represent just their particular class of employee or all employees. You should choose a length of time for which the employee representatives will be 'in office'. This period needs to be long enough to cover the consultation period
  • the election process must be by way of a secret ballot. For this reason, although ballot papers can be faxed or emailed to each individual, employees should place their ballot paper (and nothing else) either in a ballot box or in an envelope addressed to a particular person. Each individual ballot paper can be numbered, although no record should be taken as to which number was sent to which employee
  • you need to take steps to ensure that those who are on holiday, off sick, or on other forms of leave can participate, stand for election and vote
  • the counting of ballot papers must be accurate. It may be wise to arrange for one of the affected employees to join you to open and count the ballot papers to ensure a fair process is followed
  • each employee is entitled to vote for as many candidates as there are spaces to be filled (or for as many spaces as are applicable to their part of the business). For example, if there will be five employee representatives the employee will either get five votes or alternatively, one vote for the representative of their department
  • you should write to the employees to announce the outcome of the election.
  • All employee representatives are entitled to be provided with such accommodation and facilities as are appropriate to ensure that proper consultation can take place. This might mean access to space for meetings or to photocopiers.
  • All employee representatives are entitled to reasonable paid time off to perform their functions or canvass support. What is reasonable will depend on the size of organisation, the redundancy exercise, and the maintenance of security and safety. Clearly, at times the process can be time-consuming. There is no obligation to pay any additional sums for duties carried out outside working hours.
  • Employee representatives are entitled not to be detrimentally treated or dismissed because they have acted as an employee representative. Such a dismissal is automatically unfair and does not require the normal two years' continuity of employment for a claim to be brought. Furthermore, the employee will receive an enhanced basic award if they are successful.
  • You may like to consider training for employee representatives to encourage them to take an active and positive role in the information and consultation exercise.
One of the first steps in the consultation process will be making an announcement to staff of your proposals. The purpose of this announcement will be to explain what you are proposing. This will vary according to the circumstances but it should cover those issues referred to in section 188 of the Trade Union Labour Relations (Consolidation) Act.
 
This announcement may be made to employee representatives (if they are already in place) when they are provided with the letter that triggers the beginning of the collective consultation period. Otherwise, the announcement should be made to all affected employees face-to-face with a letter for employees to take away and consider. This letter should set out the next steps, such as the election of employee representatives (where there are none) or collective consultation meetings with representatives that are already in place.
 
You should:
  • ensure that anyone absent on holiday, sick leave or forms of leave is equally informed about the announcement and has a full opportunity to participate in consultation
  • ensure someone is present at all meetings to take notes including noting any manager who communicates something 'off message' so that the position can be easily retrieved; and
  • prepare frequently asked questions for managers so that they are well briefed for questions they are likely to face.
You should not:
  • tell any employees they are 'safe' unless their category of employee is completely unaffected
  • issue any notices or agree anyone can leave yet, or
  • start putting the reorganisation into effect.

The next stage is to arrange an election of employee representatives to engage in consultation about proposed redundancies (if applicable).

The third stage is for meetings to be held with representatives to obtain staff feedback and discuss the issues arising.
 
You are likely to have a series of meetings and be involved in writing various letters at this stage. The meetings would discuss amongst other things:
  • whether there are any alternatives to redundancies (see Alternative solutions)
  • the proposed redundancy process
  • whether volunteers for redundancy might be accepted
  • the proposed method of selection
  • defining the proposed units of selection
  • proposed selection criterion
  • alternative employment opportunities
  • proposed redundancy payments
  • ways to mitigate the consequences of dismissal on the affected employees.
The fourth stage will be to confirmation that collective consultation has been completed.
 
You will have been communicating to all staff throughout the process but, when you have reached the stage that collective consultation has been completed, you will need to confirm this fact in a letter and move to the next stage of individual consultation which involves inviting relevant employees to individual meetings.
It is crucial that an employer is fair in how those who are to be made redundant are selected. While an Employment Tribunal may be unlikely to challenge a genuinely held belief that redundancies are necessary, they will scrutinise the way in which you go about choosing those who are made redundant.
 
It is down to you to determine the most sensible way to achieve a fair outcome. Some organisations decide to allow staff to apply for the remaining jobs, treating selection for those jobs as akin to a recruitment exercise. Others choose the more traditional method of assessment against a matrix of skills or 'selection criterion'.

It can be useful for an employer to reduce compulsory redundancies by accepting volunteers. This can have the advantage of allowing those who want to leave to do so, it can be more palatable to staff and can shorten the inevitable period of instability. However, you should:

  • Avoid committing to accepting them as you risk losing those with skills you want to retain.
  • Define how you will choose between them if you have more people come forward than required. This may need to be considered carefully as merely selecting the cheapest redundancies to make could be discriminatory in its effect.
  • Avoid having a policy of not re-hiring anyone who takes voluntary redundancy (as this can also be indirectly discriminatory).
It is very important that you act fairly in defining the grouping of employees from which selection or assessment for redundancy will take place.
 
At its simplest, if you have 10 staff making widgets and you need to lose five, the 10 staff would be the unit of selection. However, if there are different processes and machines involved, it may be that you would prefer to define the unit in a different way, such as 'all those who work on X machines' which might only be a pool of seven. You would have to show that those working in that unit genuinely do something different to the wider group as it is fairer if all those performing a similar function are viewed together.
 
In the management context it is important to look at the jobs people actually do as well as what their job descriptions say they do. For example, if groups of employees have interchangeable skills and routinely cover for each other when they are on sick leave or holiday, it would be unfair to separate them out just because your organisation chart shows them separately.
 
It may be appropriate to divide units on geographical lines, for example, for sales staff. However, this may not retain the skills you need going forward and it could be fairer to consider the whole pool of sales staff for selection for redundancy and reallocate regions afterwards.
 
You have considerable freedom to define the unit of selection in a manner which works for you provided that it falls within the 'range of reasonable responses of an employer' and you can justify why you have chosen the method you have.
In certain circumstances, it might be justifiable to retain an employee who would otherwise be redundant by virtue of their post disappearing. This can be done by slotting them into another role 'bumping out' the employee currently occupying that position. This may be appropriate where the employee who you wish to retain has skills and attributes that are key to the organisation, for example, they could be the only person who understands the IT system in a small company. However, such bumping must be done with care as it is unfair to the person who is bumped out and whose role would otherwise not be redundant.
 
In Leventhal v North [2004] a senior executive persuaded the Tribunal that his dismissal was unfair because the employer didn't consider bumping out a junior employee so that he could fill the position. Crucially, there was alternative employment for that junior employee. The Employment Appeal Tribunal said it would depend on whether there is a vacancy, how different the two jobs are, the qualifications of the person being made redundant, the relative length of service of the two employees, and any difference in remuneration as to whether it would be fair to allow bumping.
 
Employers should also be aware that keeping a senior long serving employee over one with shorter service could result in arguments of age discrimination.
It is important that you choose selection criteria that will enable you to retain the workforce with the skills that you need going forward. Often employees will argue that particular skills or attributes should be taken into consideration but these may not be important to the future of the organisation.
 
You must also be fair in the criteria you choose and the way in which scoring or grading takes place. The following is recommended that you:
  • consult about the criteria you propose to apply so the employees can influence the process
  • check whether you have an existing collective agreement or contractual procedure governing selection criteria. You would only be able to deviate from such agreed procedure where it is justified (perhaps because the procedure uses criteria that would now be viewed as discriminatory)
  • as far as possible, choose objective criteria which you can verify by reference to data such as appraisals or training records
  • avoid, as far as possible, subjective criteria which could come down to personal opinion
  • avoid directly or indirectly discriminatory criteria (such as age or the selection of part-timers or those on fixed-term contracts first). Selection of anyone taking leave for parental reasons, who is pregnant or has undertaken duties as a trade union or employee representative should also be avoided. You may need to adjust your scoring as regards absence levels or productivity for those with disabilities, those taking different forms of parental leave or those who have had time off for trade union or employee representation duties
  • ensure that more than one person conducts the assessment, or the original markers scores are moderated by someone else, to remove suggestion of personal bias and to double check all calculations, and make sure your score sheet or redundancy matrix has guidance notes indicating what competencies are necessary for each particular score to be attained
  • ensure any test you use for assessment purposes (for example to test speed and efficiency) is capable of adjustment for those with disabilities; and
  • weight the skills or qualities you are grading in order of importance to you.
Particular care needs to be taken to avoid age discrimination. 'Experience' could work against young workers. You need to consider whether you can objectively justify that in choosing that criterion you are pursuing a legitimate aim (such as retaining corporate memory and skills) and that it is proportionate to do so and that there is not a less discriminatory way of making the selection. Whilst 'last in-first out' may be popular amongst staff it is potentially discriminatory on grounds of both age and sex, working against younger workers and women who have taken time out having children. You would need to objectively justify using it, which may be difficult as it is arbitrary and doesn't focus on skills you need in future.
 
Some employers sometimes use a 'recruitment' style approach to redundancy selection, asking employees to apply for the remaining roles and interviewing them or setting assessment tasks similar to the approach used in a recruitment exercise. While this is an acceptable method to use, care needs to be taken to be fair to the employees concerned. For example, a failure to take into account past appraisals or the views of managers who worked with employees would be unfair.
 
If all the posts in a particular area are going, no selection exercise will be necessary: All those occupying those posts will be redundant. This can also be the case where a single post is affected and the role does not overlap with other roles.

Regardless of the collective consultation you have been engaged in, you will need to consult with the individuals who are selected before any notice of dismissal is given. This is critical to avoid a finding of unfair dismissal. There are two stages to individual consultation.

The employee must be made aware that they are 'at risk' of dismissal, why they are at risk, and that they have been provisionally selected for redundancy once they have been scored against selection criterion or through some other kind of selection process. The best way to achieve this is in writing.
 
The employee should be made aware of their own personal scoring or markings in the assessment process. You do not have to show an employee everyone else's scores although they need to see sufficient information to know that the system has been fairly applied to them. This information should be given at least 24 hours before any consultation meeting with the employee.
The purpose of this meeting will be to:
  • Reiterate the reasons for the redundancy
  • Explain the process followed so far
  • Explain why the individual has been selected according to the selection criteria and is at risk of redundancy (checking facts and assumptions made are correct and being prepared to adjust the scores according to representations made)
  • Discuss alternative employment and whether the individual has ideas on how to avoid the redundancy
  • Confirm likely timescales and whether they be asked to work out their notice or will be paid in lieu of working out their notice
  • Explain any financial package on offer; and
  • Explain any support, such as outplacement, that is on offer.
At this stage you have still not made your final decision. You need to conduct meetings with all affected employees before final meetings with the employees are held and notice is given. You can only confirm people as 'safe' definitively after the appeal stage has been finalised.
 
The employee will have the statutory right to be accompanied by a colleague or trade union representative at the meeting at which they are told their employment is terminated. You should extend this right in the case of anyone who is disabled for the purposes of the Equality Act 2010 to someone appropriate or to those who struggle with the English language, to someone who can interpret for them.
It is crucial that no notice is issued to any employee during either collective or individual consultation periods as that undermines the consultation process.
 
In order to safely bring the contract of employment to an end you must issue the employee with proper statutory or contractual notice. If you have the contractual right to make a payment in lieu of notice then you may decide not to require the employee to work out their notice period. You should express clearly in a letter that a payment in lieu of notice is being made. If you need to incentivise employees to stay until the end of their notice period you may have to consider offering a loyalty bonus.
 
Any letter issuing notice to terminate an employee's employment should also refer to their right of appeal to a more senior manager who has not already been involved in the process.
Once an employee has been issued with a dismissal notice they have the right to reasonable time off with pay to look for new work or to undergo training for future employment and you must not unreasonably refuse such a request. The entitlement to such pay throughout the notice period is capped at two fifths of one week's actual pay.
 
If you were unreasonable in refusing an employee such time off, they could claim in an Employment Tribunal for the wages they should have received. It is worth noting that there have been no reported cases where the Tribunal has found it was reasonable for the employer to refuse the time off requested by the employee.
If alternative employment is available, you must inform the employee of the terms and conditions for that position so they can consider it properly. Your duty to consider what alternative employment is available continues throughout the redundancy exercise, including during any period when someone is working out their notice. In order to avoid paying a statutory redundancy payment any offer must be suitable, made before the notice period or employment ends, and involve starting employment in the new role within four weeks. From a wider unfair dismissal perspective, if alternative employment arises after the employee has been made redundant, and within the three-month time limit for the employee to bring a tribunal claim, you should consider offering the role to them as a matter of fairness.
 
In addition, you may have extra duties, as regards finding alternative employment, for those who are disabled as part of the general duty to make reasonable adjustments to accommodate the disabled person's needs. The case of Tarbuck v Sainsburys [2006] [BAILII], however, confirmed that there is no obligation to create a post specifically for a disabled person in a redundancy situation.
 
Those on maternity, paternity and adoption leave have special rights and, if selected for redundancy and there is a suitable vacancy, the employee is entitled to be offered that role. Acas has published good practice guidance on handling redundancies when you have employees who are pregnant or on maternity leave.
 
The protection for those on family-friendly leave will be enhanced in the future, and it will apply from the date the employee informs the employer that she is pregnant, whether verbally or in writing, and ends six months after the employee has returned to work.
 
Where 'suitable alternative employment' is available, and is offered to an employee, and the employee unreasonably refuses it, the employer is no longer obliged to make a statutory redundancy payment. What is 'suitable' is a two pronged test. Firstly, it is an objective test as to whether the job would be suitable having regard to the skills and qualifications needed to do it, its status, pay and benefits. However, it is also a subjective test from the employee's perspective which may depend on their personal circumstances. For example, often an employer who relocates has what it regards as suitable alternative employment for all the employees at the new site. However, an employee who walks to work may not want to spend an hour on a bus in future arguing that a long commute will affect their quality of life. These sorts of factors justify the employee refusing.

The following recommendations are made as regards alternative employment:

  • Do not assume someone wouldn't be interested in alternatives that are available, even if they are lower paid, lower status roles
  • Different departments must communicate with each other about vacancies
  • All those who are potentially redundant should be allowed to put themselves forward for potential alternative employment before any external advertisement takes place
  • If someone can do the majority of an alternative role they should be offered the position with appropriate support and training for the part of the role they have no experience in
  • All offers of alternative employment should be made in writing, spelling out the financial prospects of the role.
Under section 138 of the Employment Rights Act 1996 an employee is entitled to four calendar weeks by way of a 'trial period' in their new job. You can extend this to a longer period in writing. If either party does not consider the employment to be 'suitable' during the trial then the situation will revert to a redundancy and the obligation to make a statutory redundancy payment will apply.
 
You are able to agree a longer trial period if you wish.
An employee who is redundant will, in addition to their notice and any accrued holiday pay, be entitled to a statutory redundancy payment.
 
To qualify for statutory redundancy pay the employee must have two years' continuous service. The payment is calculated on the basis of an employee's age, length of service and weekly pay (subject to a weekly maximum, set at £538 from 6 April 2020). The formula is:
  • One and a half weeks' pay for each complete year of service after reaching the age of 41
  • One week´s pay for each complete year of service between the ages of 22 and 40 inclusive; and
  • Half a week´s pay for each complete year of service under the age of 22.
A maximum of 20 years should be taken into account when calculating a statutory redundancy payment. If employees have more than 20 years' service, the earlier years are ignored. 
 
They may also be entitled to an enhanced redundancy payment.
Many employers have a payment scheme which enhances the statutory scheme, usually using a contractually agreed formula. You need to ensure that it is compliant with the Equality Act 2010. It permits you to use the statutory redundancy payment ('SRP') as a base calculation and apply a multiplier to that, to apply a multiplier to the SRP multiplier, or to increase a week's pay to actual salary and/or to aggregate these measures. It does not enable you to fix enhanced redundancy pay on a particular length of service or to set a cap on the payment, for example, setting a maximum payment of one year's salary.
 
Some employers make 'ex gratia' payments to staff upon redundancy. There is a risk of ad hoc schemes becoming contractual as a matter of custom and practice over time. In the Albion Automotive case the Tribunal stated that this would depend on the following factors:
  • whether a policy was drawn to the attention of staff
  • whether it was followed without exception for a substantial period
  • whether payments were automatically and consistently applied
  • whether the employees had a reasonable expectation that an enhanced payment would be made
In Keeley v Fosroc International Ltd the staff handbook contained enhanced redundancy pay details which led to a presumption that it was contractual and failure to honour it would result in breach of contract claim.
 
In Park Cakes Ltd v Shumba the court looked not at what the employer intended but at what its words and conduct would reasonably communicate to the workforce. Thus where payments are described as 'ex gratia' and 'discretionary' they are less apt to become contractual than when they are described as part of a 'policy' or an 'entitlement'. Take care with the language you use when describing payments.
Statutory and enhanced redundancy payments are exempt from tax and national insurance up to £30,000. However, care needs to be taken, if someone is retiring, to ensure that HMRC do not deem the payments to be unapproved retirement benefits, which are taxable.
 
Outplacement can be provided by an employer tax free if the employee receiving the counselling has more than two years' service and it is provided to enable the employee to adjust to the cessation of the employment or to find gainful employment (including self-employment). The service should also be part of arrangements generally available to employees or former employees of the employer, or to a particular class or classes of them.
 
Normally, an employee will be taxed on any other payments they receive in connection with their employment being brought to an end, including retention bonuses and their holiday and notice pay. In exceptional circumstances, where the contract of employment does not include a clause permitting the employer to make a payment in lieu of notice and there is no custom and practice of doing this, the employee may be paid in lieu of working out their notice period tax free as damages for breach of contract. The total tax free sum the employee receives cannot, however, exceed £30,000.
The right to appeal should be offered to all selected employees when they are issued with a dismissal notice. A senior manager who has not been involved in the redundancy exercise should hear any appeals.
 
The appeal is an important opportunity to correct any procedural failings that have occurred in the process.
 

Anna-Denton Jones is a director and solicitor at Refreshing Law Ltd.

The Chancellor of the Exchequer, Rishi Sunak, released his ‘Plan for Jobs’ on 8 July 2020 to set out how the government will support economic recovery in the UK. One of the elements included was a new Job Retention Bonus (JRB) to provide additional support to employers who keep on their furloughed employees in meaningful employment, after the government’s Coronavirus Job Retention Scheme ends on 31 October 2020. 

Which employers can claim it?

All employers who furloughed staff are eligible for the JRB including recruitment agencies and umbrella companies.

Employers should ensure that they have:

  • complied with their obligations to pay and file PAYE accurately and on time under the Real Time Information (RTI) reporting system for all employees
  • maintained enrolment for PAYE online
  • a UK bank account

Failure to maintain accurate payroll data may jeopardise a claim so it is important that you keep your payroll up to date and address all requests from HMRC to provide missing employee data in respect of historic Job Retention Scheme claims.

Is there a limit on the amount of employees I can claim for?

No, there does not appear to be at this stage.

Is there a limit on the size of employer who can claim the bonus?

No, there does not appear to be at this stage.

Which employees can I claim the bonus for?

Employees must be eligible for the Job Retention Scheme and you must have claimed a grant from the Scheme for them. Government guidance says that this includes office holders, company directors and agency workers, including those employed by umbrella companies.

The JRB can be claimed for employees who:

  • were furloughed and had a Job Retention Scheme claim submitted for them that meets all relevant eligibility criteria for the scheme
  • have been continuously employed by you from the time of your most recent claim for that employee until at least 31 January 2021
  • have been paid an average of at least £520 a month between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the 3 months). The employee does not have to be paid £520 in each month, but must have received some earnings in each of the three calendar months that have been paid and reported to HMRC via Real Time Information
  • have up-to-date RTI records for the period to the end of January 2021
  • are not serving a contractual or statutory notice period, that started before 1 February 2021, for the employer making a claim.

Can I claim the bonus for those categories of people who were excluded from the 10 June ‘first time furlough’ cut off date?

Yes. The Job Retention Scheme included a cut-off date on 10 June 2020 after which no employee could be furloughed for the first time. Those on maternity, paternity, adoption, shared parental or parental bereavement leave which started before and ended after 10 June were exempt from the cut off, as were those employees who were on a period of mobilisation with the Reserve Forces which started before and ended after 10 June. Employers can claim the JRB in relation to these employees whose furlough started after 10 June 2020 provided they meet all other criteria.

Are the rules any different for fixed term employees?

You can claim the JRB for employees on fixed term contracts that are extended or renewed provided that continuity of employment is not broken and all other criteria are met.

I transferred some employees to my business under TUPE recently, can I claim the bonus for these employees?

You will be able to claim the JRB for employees who were transferred to you under TUPE law provided that you, as the new employer, furloughed the employee and successfully made a claim to the Job Retention Scheme for them.

This also applies to employees of a previous business who transferred to the new employer where the PAYE business succession rules applied to the change of ownership.

In both cases, the employees must have transferred on a date which falls by the end of the Job Retention Scheme i.e. by 31 October 2020. You cannot claim the JRB for any employee who transferred after 31 October 2020.

What earnings count towards the £520 per month minimum limit?

This is restricted to earnings recorded through HMRC Real Time Information (RTI) records. More detailed guidance on this will be published in September 2020.

How much is the bonus?

It is a one-off payment of £1000 for every furloughed employee who meets the criteria set out above. If you have furloughed many staff who meet the criteria, the bonus could total several thousands of pounds.

Is the bonus taxable?

Yes. If you receive the JRB, you must include the whole amount as income when calculating your taxable profits for Corporation Tax or Self-Assessment.

When can I claim the bonus?

From February 2021. You will be able to claim it through gov.uk. More information on this will be published in September 2020.

What should I do to prepare for claiming the bonus?

You should make sure your employee records are up-to-date, and are accurately reporting your employee’s details and wages on the Full Payment Submission (FPS) through the Real Time Information (RTI) reporting system. You should also make sure all of your claims to the Job Retention Scheme have been accurately submitted and that you have notified HMRC of any necessary amendments to your claims.

Is there anything which may prevent the bonus being paid to me?

HMRC will withhold payment of the JRB where it believes there is a risk that Job Retention Scheme claims may have been fraudulently claimed or inflated, until they have completed an enquiry.

Where a claim to the Job Retention Scheme was incorrectly made, the JRB will not be paid.

We have recently undergone a redundancy programme. We have been able to find suitable alternative employment for one of the employees to whom we had given notice of redundancy. However, she says that she does not want to do the job and would prefer to be made redundant. Her argument is that the job is working in a department where she has never worked, and where she does not want to work. Can she refuse?

If an employee who is under notice of redundancy is offered suitable alternative work, she is allowed a four week trial period in the role. If, at the end of this period of time, either the employer or the employee considers that the role is not suitable, she is entitled to return to being under notice of redundancy. If she refuses suitable alternative work then she has resigned, and would not be entitled to a redundancy payment.
 
This all means that there is a need to define 'suitable', and this is where a difficulty can arise. In Readman v Devon Primary Care Trust [2013] a community nurse was under notice of redundancy when a role became available in a hospital. She refused the role, arguing that she had worked in the community since 1985 and did not want to return to working in a hospital. The employer said that this was an unreasonable refusal and hence did not pay her a redundancy payment.
 
The Employment Appeal Tribunal ruled that an employee can refuse alternative employment, if the refusal is reasonable. It concluded that Readman's refusal was reasonable. However, the Court of Appeal ruled that the EAT cannot substitute its own view for that of the employer. Hence, the case has been referred back to the employment tribunal to determine whether Readman's refusal was reasonable.
 
What this case tells us is that an employee can refuse alternative work. However, the focus must be on the reason for the refusal and whether this is reasonable. You need to talk to the employee in question and think carefully about the reasons that she is giving for refusing the job. Consider whether she is being reasonable. If not, you should tell her that she must complete the trial period, and that she risks forfeiting her redundancy payment.

We need to cut costs in our sales department. In this department we have administrators, sales representatives and account managers. Our plan is to reduce the staff of 18 to 10. The new department will be smaller, and all staff will need to do a bit of everything, rather than specialise. On that basis, can we just put everyone in a redundancy selection pool, keep those who score highest and retrain them if necessary?

In Murray and another v Foyle Meats Ltd [1999] the House of Lords clearly set out what amounts to redundancy. There has to be a reduction in the requirement for work of a particular kind within the business, and dismissals must occur because of that reduction.
 
In your case there is clearly a reduction in the requirement for work - what you are suggesting is a form of 'bumping'. This occurred in Contract Bottling Ltd v Cave [2013].
 
The employees all worked in the accounts department, all of them were put in a pool (this included jobs such as accountants, warehouse managers and administrators) and those that scored lowest were dismissed. Employees who remained were then retrained if needed, so that they could do the remaining jobs. What you are proposing is similar to this.
 
It would seem, therefore, that there is no problem with your approach. However, you must take care with your selection criteria ensuring that it does not favour people with particular skills. If you are going to assess everyone equally the selection criteria must allow you to do this - and that will require some careful thought.

It looks very likely that my organisation will become insolvent. Inevitably, this will mean that all of our employees will be made redundant. There are over 100 employees. Will we need to consult for the full 45 days? We probably cannot trade for that long.

The requirement is to act reasonably. Clearly, you cannot continue to trade once the organisation is insolvent, because this will mean that the directors are personally liable for any obligations, as well as incurring potential criminal liabilities for trading whilst insolvent.
 
In AEI Cables v GMB [2013] an organisation facing insolvency made over 100 employees redundant. This happened when the consultation period was 90 days (it reduced to 45 days in April 2013) and the employees successfully argued that there had been a breach of the consultation requirements (there had been no consultation) and the employment tribunal awarded 90 day protective awards. This was reduced to 60 days by the EAT, given that the organisation would not have been able to trade for a further 90 days. However, it was not seen to be reasonable to have carried out no consultation at all.
 
It seems that it might be prudent to enter into consultation now, unless there are sound commercial reasons for not divulging the precarious state of the organisation. It is not likely to be reasonable to engage in no consultation, but if it is really not possible to consult for the 45 days it could be acceptable as long as all reasonable attempts at consultation have been made.

We are currently managing a redundancy situation. We have identified a selection pool for one of the redundant positions. This is a pool of four marketing officers. One of the marketing officers is currently on maternity leave - she has now been away for 10 months. In our selection matrix we have a number of criteria that relate to performance in the job (as well as other criteria such as attendance). Our company policy has always been to focus on the last nine months when assessing performance. For the marketing officer that is on maternity leave can we focus on her last nine months at work?

The requirement is to ensure that you treat the marketing officer who is on maternity leave in the same way as the others in the pool. You are not required to treat her more favourably.
 
You need to consider if you are able to assess her adequately against the performance criteria when you think about the last nine months that she worked for you. Did she have the same opportunity to demonstrate her ability against those criteria as the opportunities that the others in the pool have had over the past nine months?
 
In Riežniece v Zemkopibas ministrija and another [2013] the employer made redundancy selections using recent appraisal information. One employee was on maternity leave and she was assessed using historical appraisal information that did not include all of the same criteria as the others. She was selected for redundancy. This was found to be unfair, because the selection method must be the same for all employees.
 
If the selection criteria that you are using is the same for all those in the pool, and all of those in the pool have had an equal opportunity to demonstrate their abilities against the criteria, then the approach to selection will be acceptable. You must be sure, however, that you are able to assess the employee on maternity leave fairly and appropriately.

We understand that we are required to collectively consult with employees if there are to be more than 20 redundancies in a 90-day period. We have two sites but each site has fewer than 20 redundancies. At one we are going to have 15 redundancies and at the other 10 redundancies. Is collective consultation required?

Yes, you will be required to have a period of collective consultation. In the case of Usdaw v W W Realisation 1 Ltd [2013] this question was addressed. The case related to the collapse of Woolworths. There were inadequate attempts at consultation, and a protective award was made for each employee who was made redundant. It was argued that this should not apply to those working in stores with fewer than 20 employees, because collective consultation was not required in those situations. This argument was unsuccessful.
 
The EAT has ruled that the wording of the Trade Union and Labour Relations (Consolidation) Act 1992 does not meet the requirements of the European Union collective redundancies directive when it refers to redundancies at 'one' establishment. The EAT held that 'establishment' has to be interpreted more broadly, and that if an organisation has redundancies taking place at a number of locations at the same time, this should be interpreted as being at one establishment.
 
So, in your case the courts would reason that you have 25 redundancies during a 90-day period. There is a requirement, therefore, to enter into collective consultation with representatives of employees that are affected at both sites.

We are facing a downturn in work and need to reduce headcount. We have decided to start by asking for volunteers for redundancy, hoping to avoid any compulsory redundancies. We have decided to exclude part-time employees and those on career breaks from applying for voluntary redundancy. Is that acceptable?

No. First, as a result of the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, part-time workers must not be treated less favourably than full-time workers. Denying access to voluntary redundancy is less favourable treatment, and will be unfair.
 
The difficulty of excluding those on career breaks is that they are most likely to be women (presuming that most career breaks are taken to raise a family) so this could be indirect sex discrimination. In HM Land Registry v McGlue [2013] an employee was refused voluntary severance when the employer unilaterally decided to exclude all those on a career break from the scheme, without consulting employees or their representatives. She was successful in her claim of indirect sex discrimination. The voluntary redundancy scheme should be open to all employees to avoid any allegations of discrimination or unfair treatment.
We have an employee who is very difficult! She complains about everything, has raised numerous grievances and is also a poor performer. She has received formal disciplinary warnings about her attitude and her performance, and always improves for a few months until the warning expires and then her performance deteriorates again.
 
A redundancy situation has now arisen in her team - two jobs need to go. The selection has been carried out, using an agreed selection matrix. She has been selected for redundancy. At the initial consultation meeting with her, she alleged we are actually dismissing her for conduct, and that redundancy is an excuse. What should we do?
You need to be certain there is a redundancy situation. As you have said that two jobs are going, it does not seem that a situation has been created to dismiss this employee; but look back at the definitions of redundancy in the Employment Rights Act 1996. Is the situation one where the business is ceasing to operate, or is it ceasing to operate where the individual is employed, or is there a downturn in demand for the work the employee does?
 
If you are certain there is a genuine redundancy situation, the next step is to look again at the selection matrix. If it is possible, has it been completed by two managers independently? Is the selection reasonable and fair?
 
In Fish v Glen Golf Club [2012] [BAILII] an employee argued that he had been dismissed for conduct, when selected for redundancy. However, the employment tribunal found that although there was some evidence to suggest conduct and capability issues, there was a real redundancy situation. If your employee has been a poor performer, it does not seem illogical that she is selected using a fair redundancy selection matrix.

We have recently completed a redundancy selection process. The trade union is arguing that we did not consult adequately because we did not provide them with all the information they required. Specifically, they are saying that we did not provide information about agency workers. We did not realise this information was a requirement, and so did not provide it when requested. The union says it is going to seek a protective award for all those affected by the redundancy. Will this be granted when we made a genuine error?

When consulting in a redundancy situation there is a list of information that must be provided to the employee representatives at the start of the consultation. Employers must provide the:
  • reason for the proposed redundancies
  • type and number of jobs that are proposed to be made redundant
  • total number of employees at the workplace where the redundancies are to take place
  • method used to calculate redundancy pay, if the employer plans to pay more than the statutory minimum
  • number of agency workers working under the supervision and direction of the employer
  • type of work the agency workers do and which partsof the organisation the agency workers are engaged in.
The last two points were added as a result of the Agency Worker Regulations 2010 - it looks as if these are the three points you did not address.
 
Unfortunately, the courts could conclude that you have not consulted adequately. In Unison v London Borough of Barnet and Another [2012] the trade union asked for this information and it was not provided. The employment tribunal granted a protective award.
 
It is essential to ensure that all information that is legally required is given. It is also essential to respond to any requests for information unless they are clearly unreasonable.

We have a well-established assessment centre that we use for the recruitment of sales representatives. We need to reduce the headcount of the sales force by 10 per cent. Can we use the recruitment assessment centre to select employees for redundancy?

The law does not set out a way that must be used for redundancy selection, but case law shows that it must be as objective as possible. It must also be fair and reasonable. Using an assessment centre process is likely to be reasonably objective, but using just that might not be fair.
 
In Mental Health Care (UK) Ltd v Biluan and another [2012] the organisation put together an elaborate redundancy selection process that was partly based on the approach they used to recruitment selection. However, they had no regard to the performance of the individuals in their jobs and went ahead with the redundancies even though there were some surprising results. The EAT found they had lost touch with common sense, and that the approach was not fair.
 
So, as well as using objective selection criteria, it is important to think about what would be fair, and performance in the job is something that really should be included. It is also important to remember that a recruitment assessment centre is used when the employer knows nothing about the abilities of the individuals. Redundancy selection is not the same situation. So, all tasks within the assessment centre should be questioned - will they really tell you anything that you do not already know about the performance of your employees in their jobs?

Is it possible to have a redundancy selection pool of just one person? We are currently in the collective consultation process relating to a redundancy of 57 jobs. We have been identifying the jobs that are to be made redundant and one is the job of Maintenance Manager. We have smaller premises than we used to have, and there is not enough maintenance work for a full time person to do. Hence, we have decided to make this job redundant and just seek support from an appropriate tradesperson as and when it is required. Our Maintenance Manager is the only person in the maintenance department. No-one else is involved in maintenance at all. By deciding that the job is redundant have we also selected the person?

Yes! As you have correctly identified, a job is made redundant in the first instance. If a number of people do that job then there is the requirement to select the employees to be dismissed due to redundancy from those people. However, if there is just one person doing the job there is no valid selection that can be carried out.
 
In Halpin v Sandpiper Books [2012] the EAT supported the findings of the Tribunal that a selection pool of one was reasonable. In reaching their decision they gave the following guidance:
  • If appropriate, it is acceptable to have a selection pool of one.
  • Management are entitled to determine a selection pool.
  • If the decision about the selection pool is a reasonable management decision, then it would be a rare situation when the Employment Tribunal could argue with it.
I work for an organisation that operates on two sites, which are ten miles apart. One site manufactures large metal parts and the other site manufactures smaller metal parts. We have a quality engineer at each site. Although their work differs in some ways, they do cover for each other during holidays and sickness absence, and they do carry out quality audits at each other's sites.
 
We have announced a redundancy of thirty jobs at the site that manufactures large metal parts. Included in the list of jobs to be made redundant is the quality engineer. I had intended to just make the quality engineer redundant, without any selection as it is a unique job on the site. However, the quality engineer has argued that he should be in a selection pool with the quality engineer on the other site. Is he correct?
In considering whether a selection pool has been fairly identified an Employment Tribunal would want to see that careful consideration has been given to the selection pool. As the quality engineer has queried the pool it is essential that you give serious consideration to the point that he has made.
 
In the Court of Appeal judgment in Thomas and Betts Manufacturing Ltd v Harding [1980] it was identified that the following factors need to be considered:
  • Whether other groups of employees are doing similar work to the group from which the selections are being made
  • Whether employee's jobs are interchangeable
  • Whether the inclusion of the employee in the selection pool is consistent with his job role
  • Whether the selection pool has been agreed with the trade union or employee representatives
In this case it does seem that the two quality engineers are doing similar work because they cover for each other during holiday and sickness absence. It also seems that their jobs are interchangeable to some degree. It could further be argued that including both quality engineers in the selection pool is consistent with the job roles, due to the way in which they cover for each other and carry out quality audits on each other's sites.
 
Clearly a key reason why the two quality engineers have not been included in the pool is that the redundancies are taking place at just one site, and they work at separate sites. However, in the case of Highland Fish Farmers Ltd v Thorburn and another [1994] the EAT found that employees working in fish farms scattered throughout the North of Scotland should have been in the same selection pool, even though two of the sites were a 40 minute travelling distance apart.
 
It is recommended that you try to agree the selection pool with the trade union or employee representatives as part of the consultation process. However, given the law outlined here it would seem appropriate to put both quality engineers into one selection pool, and to carry out a selection process to determine which engineer should be made redundant.
My organisation has recently announced a redundancy of 45 jobs. I am currently in the process of consulting with the trade union representatives about the redundancy, and today we have been discussing the selection criteria that will be used to identify individuals who will be made redundant.
 
We have agreed on every criterion apart from absence. The organisation wants to include sickness absence as a selection criterion with a points-based assessment being used on the selection matrix that gives maximum points for full attendance in the last 12 months, ranging to zero points for 21 or more days' sickness absence in the same period.
 
However, the trade union representatives will not accept this because they say that it is disability discrimination. I am really surprised by their reaction and am not sure what to do. It does seem that sickness absence is a relevant criterion to include, and as it can be objectively assessed I thought that the trade union would want it included.
You are certainly correct that using objective criteria is a good aim. Indeed, the Employment Tribunal would look to see that any criteria used have been assessed as objectively as possible. However, you must take care when using sickness absence as a selection criterion.
 
It is important to be reasonable in the period over which the absence is assessed. In the case of Fleming v Leyland Vehicles Ltd [1984] the organisation was criticised by an employment tribunal for limiting the assessment period to just six months, and suggested that eighteen months would have been more reasonable as a shorter period was more advantageous to a shorter-serving employee.
 
It is not necessarily unreasonable to consider the health of an employee in the selection process, but it would be disability discrimination if the employee's poor health amounted to a disability. In Clare v County Durham Health Authority [1997] an employee was selected for redundancy following a long absence due to a disability. This was found to be discriminatory because the employee had previously had an excellent attendance record prior to the disability occurring. In accordance with the Equality Act 2010, reasonable adjustments should have been made.
 
So, it is possible to include sickness absence as a criterion for selection. However, you must have in place some reasonable adjustments so that those who are disabled do not suffer any detriment. The simplest approach would be to discount any absence that related to a disability when carrying out the assessment.
We currently have a sales manager and a service manager. Due to a reduction in work, we have decided to make both jobs redundant and create a new post of sales and service manager. The manager will need to have sales experience, and also technical experience (to support the service part of the role).
 
Our current sales manager is an excellent sales person, but does not have the required technical knowledge. Our current service manager has excellent technical knowledge, but could not sell anything! So, we have decided that both will have to go and we will recruit a new person. Do we have to allow the two managers to apply for the job?
The first question is whether you can demonstrate that both of the current jobs have gone. To do this, you will need to be able to show that the new job is significantly different to both of the current jobs.
 
If this is the case, then you will need to enter into a period of individual consultation with each of the managers concerned (even if this is part of a larger redundancy situation and collective consultation is therefore required, you will still need to engage in individual consultation). As part of this consultation, you will have to consider whether there is any suitable alternative employment available. If either manager considers the new job to be a suitable alternative, it would be sensible to allow them to have an interview. However, you could certainly emphasise the difference between their current role and the new role.
 
If it is thought that one of the managers might be able to do the job, a trial period of four weeks is allowed. If, during this period, either of you concludes that the job is not a suitable alternative, the employee can leave the job and return to being on notice of redundancy.

We have an employee who works on a part-time basis. It has now been identified that the job requires more time, and hence it needs to be carried out on a full-time basis. The employee does not want to work longer hours. Can we make him redundant and then advertise the new role?

This is a tricky situation. Redundancy occurs when there is a reduction in need for work, or a business is closing. However, in this situation, there is clearly an increase in the need for work.
 
The first step is to talk to the employee. Even though the employee does not want to work on a full time basis, is there other part-time work in the organisation that he might be able to do? Also, why does he want to work part-time? If the reasons relate to him caring for an adult or a child aged under 17 years he could make a request for flexible working, which would have to be considered (although the request can be rejected). Does he want to work part-time because he is not well? Could he, therefore, be disabled under the Equality Act 2010? If so, does this mean that allowing him to work part-time could be a reasonable adjustment? You need to explore these issues before deciding what to do.
 
If he just prefers to work part-time, would it be beneficial to the organisation to employ another part-time employee and have the two of them working in a job share arrangement? Clearly he must have a lot of knowledge of the organisation, do you want to lose that?
 
It would be difficult to justify a redundancy in this situation, if you have not explored all reasonable alternatives.

We have experienced a downturn in business. We are hopeful that this is not permanent, and hence we do not want to make employees that have valuable knowledge and experience redundant. So, we have decided that we will ask all employees to reduce their hours. We know that this is a variation of contract, and hence we know that we need to seek agreement. However, what we want to know is if employees can insist that they are made redundant instead of taking a reduction of hours?

To claim a redundancy payment the employees would have to have their employment terminated by the organisation. If you consult with employees about the proposed reduction in hours and this is not successful, then one option you could consider is dismissing the employees that will not agree. However, if you did this and the reason for the dismissal was a reduction in work it is possible that they could claim a redundancy payment. This is what happened in Packman t/a Packman Lucas Associates v Fauchan [2012]. In this case one employee was asked to reduce her hours, but refused and was subsequently dismissed. She successfully claimed that she was entitled to a redundancy payment because the reason for her dismissal was that the requirement for her work had reduced (which is one of the definitions of redundancy).
 
An employee cannot insist that you make him/her redundant. However, if you dismissed an employee due to a reduction of work then it is very likely that this would be seen to be a redundancy situation.
Over the past few months we have been going through a redundancy programme. Consultation is now completed, employees have been selected, and notices of redundancy have been given out.
 
One particular employee was selected for redundancy and due to his length of service was giving eleven weeks' notice. He is currently in the second week of that notice period.
 
Since giving him his notice of redundancy it has become apparent that that there were some irregularities in the accounts department where he worked. An investigation has taken place, and it is very clear that he has been taking money from the company. In total he has taken £1,567. This is gross misconduct, and we would normally go through the dismissal process and then summarily dismiss him. We have put the allegations to him, and he has admitted them. However, he says that he has already been given his notice and hence we have to pay him for the full eleven weeks. Is this correct?
This is a difficult and unusual situation. It is similar to what happened in Cavenagh v William Evans Ltd [2012]. Cavenagh was Managing Director of the company. It was decided that his role was redundant, and the employer agreed to pay him six months' pay in lieu of notice in line with a clause in his contract. However, before the payment was made it was discovered that Cavenagh had paid £10,000 of the company's money into his pension knowing that he was not entitled to do this. The company found that this was gross misconduct. If this had been discovered prior to the redundancy then Cavenagh would have been dismissed. Hence, the company argued that they were no longer required to make the payment in lieu of notice.
 
The Court of Appeal found that Cavenagh was entitled to the pay in lieu of notice, because his employment had been terminated due to redundancy. There was no provision in the contract which allowed for the payment in lieu of notice to be withheld if it was subsequently found that he had committed gross misconduct. Also, there was no general principle of law that meant that Cavenagh had no right to pursue the pay in lieu of notice as a debt owed to him by the company.
 
Given this case, it seems that you are required to pay the notice, unless the situation is addressed in your disciplinary policy or contracts of employment.

We have recently announced a redundancy and five employees have indicated that they would like to volunteer for redundancy. We are prepared to accept them as volunteers, and hence we have asked them to write to us formally and resign from the organisation. However, one of the employees has said that he is not prepared to do that, because he is concerned that this would mean that he was not entitled to a redundancy payment. Should he resign?

No. If there is a genuine redundancy situation then an employee who volunteers for redundancy is still considered to have been dismissed on the grounds of redundancy. It is not a resignation, and it is not a termination by 'mutual consent'.
 
It is important to ensure that a distinction is drawn between voluntary redundancy and accepting early retirement. In Birch and another v University of Liverpool [1985] the University offered an early retirement scheme, but also said that there would need to be redundancies if there were insufficient people prepared to accept early retirement. The Court of Appeal found that there was no dismissal of those who opted for early retirement - their contracts of employment had been terminated by mutual consent.

I used to work for an organisation which started to struggle financially and most of the employees, including me, were made redundant. I received a letter explaining that I would be paid a statutory redundancy payment and notice pay of six weeks (I had worked for the organisation for six years), but before I received the money the company was dissolved. I then received a letter saying that I now had to claim the money from the state, and was sent a form to complete. I asked an ex-colleague of mine from our old HR department who was also made redundant at the same time, and they told me that I can only claim the statutory redundancy payment and not the notice pay. Why?!

If the organisation that you work for closes then it is possible to claim money from the Government. This applies if the organisation is a company or limited liability partnership and goes into administration, liquidation, receivership or a voluntary arrangement with creditors. If the employer is an individual it applies if they file for bankruptcy or enter a voluntary arrangement with creditors.
 
Under these circumstances an employee is entitled to claim:
  • their statutory redundancy payment
  • wages - up to a maximum of eight weeks
  • holiday pay - up to a maximum of six weeks
  • compensatory notice pay - one week after one calendar month's service rising to one week per year of service up to a maximum of 12 weeks (the statutory maximum for a week’s pay applies).
So on the face of it, it looks like you could be eligible to claim the notice pay after all, but it is important to be clear about what exactly has happened to your former employer as insolvency needs to meet specific criteria. In the case of The Secretary of State for Business, Innovation and Skills v (1) Miss CM Coward (2) Local Taverns Ltd [2011] the claimant was made redundant, and soon after the company became insolvent. The claimant asked for a statutory redundancy payment and notice pay from the Government. However, the Secretary of State argued that only the redundancy payment should be paid, because the definitions relating to insolvency had not been met in this situation. The EAT supported this.
 
Your eligibility will depend on the exact situation of the organisation. If an administrator has been appointed then they will usually be able to advise former employees of their situation, so we recommend that you investigate further to find out if your ex-employer has one and go from there.
I work in a University as the HR manager. Like many universities, we have currently been carrying out a redundancy programme. Previously our university was divided into four separate schools and each school had its own support function. As part of the restructuring we have merged two of the schools, and hence we have merged two of the support functions.
 
In the Admissions team there was a team leader and three admissions administrators in each school. In the merged school we have one team leader and four admissions administrators. Three of the administrators volunteered for redundancy. As neither of the team leaders volunteered we carried out a selection procedure and selected one for redundancy. However, we offered this team leader the role of admissions administrator which she accepted. As part of the deal we agreed to preserve her salary, and also agreed that she would deputise for the team leader if they were absent.
 
As this was an offer of alternative employment we agreed that the usual four-week trial period would apply. However, after just three days the employee has told us that she does not want to continue in the role of administrator and that she wants her redundancy money. As we agreed to preserve her salary, the work was work that she can do, and she will deputise for the team leader we have informed her that her refusal is unreasonable and that she will be treated as having resigned and she will no longer be entitled to a redundancy payment. Is that acceptable?
In accordance with the Employment Rights Act 1996 , the Employment Tribunal would consider whether the job that was offered is suitable and, if it is, whether refusal of the job was reasonable. In determining this, the Employment Tribunal would have regard to the specific facts of the case.
 
Suitability is usually assessed with regard to factors such as job content, status, terms and conditions etc. In this case it seems that there is no argument that the employee has the skills to do the job, and her salary is unaffected by the change. However, there is an impact on status. It could be argued that the "demotion" to administrator means that the job is not suitable.
 
There have been various cases where an employee has been given a job that is, in reality, a demotion with a preserved salary. It is usual for the Employment Tribunal to conclude that the drop in status means that the alternative employment is not suitable. In the case of Chesson v Popular Hire Services Ltd [2001] one branch was closed and the manager of the branch was offered a role working at another branch (with no reduction in salary), but in a subordinate role to the manager at that branch. This was not seen to be a suitable alternative. This case is very similar to your situation, with the team leader concerned being required to work as a subordinate to the other team leader.
 
Even if it were concluded that the alternative offer of employment was suitable it could still be reasonable for the employee to refuse the role. In the case of Cambridge and District Co-operative Society Ltd v Ruse [1993] , Ruse was the manager of a butcher's shop that closed down, and he was offered the position of butchery department manager in a supermarket. Ruse refused the role because he would have been under the control of the store manager and there was a perceived loss of status because he would no longer be responsible for banking money and would not have his own key to the store. The EAT found that refusing the job because of the perception of the loss of status was reasonable.
 
Given this, it would seem that the role of admissions administrator is not a suitable alternative due to the loss of status. Even if you were able to argue that it is a suitable alternative, it is quite possible that the employee could argue that it was reasonable to reject the offer. On that basis, it would seem appropriate to reinstate the notice of redundancy and to pay the appropriate redundancy payment on the termination of her employment.
It has been decided by the senior management team that one of our shops (we have a chain of 15 shops) is going to close. This is because it is unprofitable. The shop in question is very large, and staffed mainly by part-time staff. In total there are 88 staff at the shop.
 
Although the decision has now been made that the shop will close, it will continue to trade for another six months. This is for a variety of reasons, including the intention to keep it open for the Christmas trading period.
 
As there will be 88 staff being made redundant we know that we need to consult for at least 30 days. However, we are concerned that we are required to consult when decisions are still at a 'formative stage'. Can we delay consultation until nearer the date when we plan to close the shop?
In Akavan Erityisalojen Keskusliitto Aek RY and Others v Fujitsu Siemens Computers Oy [2009] the Supreme Court of Justice of Finland referred a question to the Court of Justice of the European Union seeking advice on the application of the EC Collective Redundancies Directive.
 
The Directive states that 'where an employer is contemplating collective redundancies, he shall begin consultations with the workers' representatives in good time with a view to reaching an agreement' (Art 2.1).
 
The ECJ ruled:
  • Employers must give notice to the trade union as soon as a strategic decision is made that causes the local employer or subsidiary to consider mass redundancies.
  • The duty to consult does not depend on whether the subsidiary has all the information that it must submit to unions under the requirements of the Directive. The employer can supply information as it becomes available.
  • The subsidiary must complete the consultation before any terminations take place regardless of whether the terminations come as the result of a direct instruction from the parent company.
On the basis of this ruling, it seems that you cannot delay the start of consultation. You have already made a strategic decision which results in you considering mass redundancies. Indeed, if you do not consult at this stage one could ask what point there will be in any consultation. If you wait until all decisions have been made, then the consultation will be worthless.