Redundancy

Bona fide redundancy?

To prove that your redundancy situation is genuine, your employer must show it has reasonable grounds for making you redundant.

Legitimate reasons could be:

• Closure of part or all of the business
• Site closure, or transfer of your particular type of work to another premises
• Reduced need for people carrying out your particular type of work

What isn’t permitted is for your employer to try to get rid of you for completely different reasons. If your employer’s real reason for dismissing you is because of your conduct, performance, sickness absence or any other reasons, it must use the correct procedures instead. Redundancy cannot be used as an excuse.

If it is unable to prove that your redundancy is genuine, it might be willing to offer you a Settlement Agreement to leave on agreed terms.

Most important is this. If your dismissal is not “wholly or mainly” attributable to a genuine redundancy situation, you can make an employment tribunal claim for unfair dismissal.

Redundancy consultation

If your employer is planning to make redundancies, it must go through a formal process of consultation. How this takes place is determined by how many other staff are affected:

• Where proposed redundancies involve 100 or more employees, consultation must last at least 45 days. For between 20 and 99 employees, it is 30 days. Collective consultation must be with trade union representatives. If there is no recognised trade union, it must be with elected workforce representatives. WRS can provide you and your colleagues with professional guidance and support in these circumstances.
• There is no requirement for collective consultation for reorganisations affecting less than 20 staff. Instead, your employer must individually consult with all affected employees over a ‘reasonable’ period of time. During this consultation, you have a legal right to insist upon being accompanied at meetings by a union representative – such as one arranged by WRS if you have not previously been a union member.

Consultation must not be limited to merely telling you that you are being made redundant. It must be more meaningful. It should start before a decision has been reached on making you personally redundant. Your employer must explain the reasons for redundancies in full. Also the numbers and descriptions of employees affected. And the method it proposes to adopt for deciding who will be made redundant. You should be provided with the opportunity to discuss possible alternatives to redundancy.

If your employer fails to follow this process, you could take it to employment tribunal claiming unfair dismissal. This is even the case if a genuine redundancy situation exists.

Selection for redundancy

During a redundancy programme, all staff in similar circumstances must be treated the same.

A site or business closure may mean that everyone will be made redundant. But in other cases, there may be a reduced need for staff – with some being retained in the same or different roles, whilst others are to be made redundant. Where this is the case, your employer must go through a fair process to decide which employees will be retained and which it will dismiss by redundancy.

To do this, your employer must identify all staff who are somehow affected by the redundancy situation. It must place them in one or more selection pools. Each selection pool should consist of staff who do – or are able to do – work of a similar type.

It is important to stress that, at this stage, technically it is only the job that is being made redundant. A proper process must then follow to decide whether you personally will be appointed to another role or made redundant.

To operate correctly:

• The selection pool must consist of all employees in the same or similar roles, or perhaps have overlapping responsibilities. This must include workers in other sites within relatively close proximity. No-one can be added or excluded from this selection pool without good reason. It is possible that you could end up having to apply for your own job. This could happen if a number of employees with the same or similar roles to yourself are affected by a reorganisation.
• The selection process must be as fair, objective and transparent as possible. This often involves giving each employee a score based upon their recent performance, abilities and skills. As part of the consultation process, you have a right to know exactly how these assessment arrangements will operate.

Those people with the highest scores should then be appointed to remaining roles. Those who are not, may be put ‘at risk’ before being moved into what’s known as ‘suitable alternative employment’, or ultimately be made redundant.

You have a right under the Data Protection Act 1998 to see how you personally have been assessed during the Selection Process. This entitles you to see how your score compared to other employees; albeit that information that could be used to identify specific individuals will be removed.

If your employer fails to follow this process correctly, you could argue that you have been unfairly selected for redundancy. You could take your case to employment tribunal.

Any employee not appointed to a remaining role following a selection process, is known as being ‘at risk’. At this point your employer can put you at notice of redundancy, with your contractual notice period (see below) commencing.

Voluntary redundancy and ‘bumping’

Good employers often offer opportunities for voluntary redundancy in order to reduce the need to make other staff compulsorily redundant. But they are not required to do so.

Where voluntary redundancy applications are accepted, they are treated as dismissals rather than resignations. Employees leaving can then receive up to the first £30,000 of their redundancy payment tax-free.

Another way of avoiding compulsory redundancies is what is known as ‘bumping’. Here, an employee who is not in a redundancy selection pool, but is interested in leaving, may agree to swap places with someone who is at risk of redundancy and wants to remain employed. It creates a ‘win-win’ situation. One individual gets to keep their job; the other gets the redundancy payment they are seeking.

In both sets of circumstances, employees taking voluntary redundancy may be asked to sign a Settlement Agreement.

Suitable alternative employment

Before making you redundant, your employer has a legal duty to consider whether there are other suitable alternative roles that you would be capable of doing with modest training.

Sometimes, an employer may not be intending to make you personally redundant. But they may want to move you into an alternative role that you personally do not consider suitable. This can be an issue in circumstances where you are entitled to a higher redundancy payment under your company’s own scheme, which your employer wants to avoid paying.

In fact, cynical employers can sometimes use this as a ruse to avoid making any redundancy payment to you. They hope that if they move you into a job you don’t like, you will eventually resign without compensation.

To be considered as ‘suitable alternative employment‘, a role must:

• Require broadly similar competencies, skills and experience to your previous role
• Be at a similar grade, level of seniority and status
• Be a ‘proper job’ rather than being only short-term
• Have the same working hours and a similar working pattern
• If at a different site, be within reasonable travel to work time and distance from where you live

It is possible that you could be downgraded into a slightly lower-graded role. Here, you would retain your current pay, but might not receive further pay increases for a while.

Where it is not clear whether a role genuinely is suitable, you could be offered a trial period of 4 weeks – or longer if training is required. If the role is found not to be suitable, you would retain your right to redundancy pay.

If you are said to have acted unreasonably in rejecting a role that genuinely is suitable to you, you may forfeit your right to redundancy pay. However, if it is not suitable, your employer will have no option but to accept that you are redundant. Ultimately, the decision on which applies may have to be made by an employment tribunal.

Appeals

Your employer may have a formal policy you can use to make an appeal against your selection for redundancy. Or you may want to challenge your appointment to a role that you do not consider to be a suitable alternative.

If your employer doesn’t have a specific policy for redundancy appeals, you will be able to use its grievance policy instead.

Whichever is the case, you will be able to exercise your right to be represented. Here you will have a right to be accompanied by a representative of a trade union – such as one arranged by WRS if you have not previously been a union member.

Statutory redundancy pay

If your employer does makes you redundant, it will be required to pay you Statutory Redundancy Pay (SRP). You are entitled to this so long as you have been continuously employed for more than 2 years.

The formula used to determine how much statutory redundancy pay you are entitled to takes into account how long you have been employed, your age, and your gross weekly pay before any taxable deductions. Importantly though, for calculation purposes a maximum of 20 weeks’ service is taken into account and the amount of weekly pay is capped at £508 (from April 2018 – equivalent to a salary of £26,416).

Your statutory redundancy entitlement would be:

• 1.5 week’s pay for each year completed when you were 41 or over
• 1 week’s pay for each year between ages 22 and 40
• 0.5 week’s pay for each year when you were 21 or younger.

You can use the government’s ready reckoner to calculate what this would mean for you.

The absolute maximum statutory redundancy pay you could be entitled to is £15,240 (from April 2018). This would be paid free of tax.

Notice period

You will also be entitled to your contractual notice period once your employer has decided to make you redundant.

The amount of notice you receive depends on how long you have been employed. It will be a minimum of 1 week; climbing by an extra week for every year’s service you have completed up to a maximum of 12 weeks. In some cases, your contract of employment may entitle you to more than this.

Your employer may require you to work your notice, place you on ‘garden leave’ (when you are no longer required to report to work), or pay you in lieu of notice. If you are paid in lieu of notice, this will be subject to normal tax deductions.

During your notice period, you are entitled to paid time off to look for alternative jobs.

Enhanced redundancy pay

Some employers offer superior severance terms over and above the frankly derisory entitlement to statutory redundancy pay.

If your employer does, details will be provided either in your contract of employment or in your company’s policies and procedures. Enhanced severance terms could entitle you to as much as two years’ salary compensation, depending on your length of service. The first £30,000 of this payment is tax-free.

In some cases, enhanced terms might mean that your employer is incentivised to try to place you into an alternative role, rather than make you redundant, if it is looking to save money. This could be a role that you do not consider to be suitable. In this case, the focus of your representation needs may be to reject the alternative roles being offered and secure payment of your full company’s full severance entitlement instead.

WRS support

WRS’s union specialists have a huge amount of experience supporting employees affected by redundancy programmes.

They have handled many hundreds of different reorganisations and redundancy programmes involving many tens of thousands of workers. This support has been for staff working in a wide range of organisations – from FTSE 100 companies and public sector organisations, to small enterprises.

Our experts can soon establish whether yours is a genuine redundancy, or if it is not being handled properly.

If your situation is not a bona fide redundancy, they can either help you to retain your job. They can accompany and represent you at redundancy consultation, redundancy appeal and grievance meetings. Or else they can negotiate far better compensation for you in the form of a Settlement Agreement if your employer wants to avoid being taken to employment tribunal.