Redundancies. Philip Bartlett and Stephanie Cackett. 18 April 2012

Transcription

1 Redundancies Philip Bartlett and Stephanie Cackett 18 April 2012

2 Introduction Individual redundancies Pools of one Selection: Scoring for Maternity Leave Fair Consultation Suitable Alternative Employment Collective redundancies Expiry of Fixed Term contracts What is an establishment? When do you need to start consulting? Elections without ballot Protective Award Government s Call for Evidence 2 / Doc ID: L_LIVE_EMEA1: v2

3 Recap: Individual redundancies Definition ceasing to carry on business ceasing to carry on business at location reduced requirement for work of a particular kind (Note that definition for collective consultation purposes is different for a reason not related to the individual as individual) Pooling Selection Warning and Consultation Suitable alternative employment 3 / Doc ID: L_LIVE_EMEA1: v2

4 Individual redundancy: Case Study You are the HR Manager for SANDS LLP. The head of the Actuarial Department, Steve, has come to you for advice on making headcount reductions in his department. Steve explains to you that there are currently 4 employees in his department who carry out actuarial work for a number of schemes, but that the level of work has dropped off and there is no longer sufficient work for 4 people. He wants to make one person redundant. Steve explains that in this industry, it is very difficult to assign a different actuary to a client if they have been working with the same actuary for a long period it is very much down to individual relationships. Steve also explains that of the 4 employees, a very significant number of Helen s clients have terminated their relationships with the firm. In 2009, Helen advised on assets work around 70 million, whilst today she advises on assets worth only 30 million. The other three actuaries each advise on assets that fall within the range of million. Because Helen has suffered such high losses, Steve wants to put her into a redundancy pool of one. What is your advice? 4 / Doc ID: L_LIVE_EMEA1: v2

5 Pools of One No fixed rules on how to define the pool, but Capita Hartshead Ltd v Byard reminds us that: The definition of the pool is primarily for the employer The reasonable responses test is applicable to the selection pool Employer must have genuinely applied its mind when deciding the pool If the employer has, it will be difficult, but not impossible to challenge the pool Halpin v Sandpiper Brooks Pool of one was fair because of employee s unique job scope (It can be fair to dismiss all the candidates in a pool) 5 / Doc ID: L_LIVE_EMEA1: v2

6 Selection and maternity leave We ve decided that all four employees should be pooled for this redundancy process. Suppose that one of the four is on maternity leave. How might this affect the selection process? Eversheds Legal Services Ltd v De Belin Employee on maternity leave can be treated more favourably in order to compensate her for a disadvantage due to her absence, BUT the treatment must be no more favourable than is reasonably necessary to achieve that purpose. Facts of De Belin - Female on maternity leave awarded full marks for one criterion because employer could not assess her performance. As a result the male was made redundant. Discriminatory and unfair How will we score our four employees on eg attendance, lock-up, billings? Remember will the favourable score for the individual on maternity necessarily result in the redundancy of someone else? If yes, consider this score very carefully. 6 / Doc ID: L_LIVE_EMEA1: v2

7 Fair Consultation You have already informed the four employees that they are being placed in a redundancy pool. You ve now completed the selection matrices and Dave has unfortunately scored lowest. You hold a consultation meeting with Dave, give him a copy of his matrix, and explain that as he scored lowest, he is potentially redundant. You scored the employees on: attendance, lock-up, billing, potential, skills, experience and outstanding disciplinary warnings. Do you need to give Dave any more information about his scores? 7 / Doc ID: L_LIVE_EMEA1: v2

8 Fair Consultation (continued) Pinewood Repro Ltd (trading as county Print) v Page Must give sufficient information for Dave to respond and argue his case You may need to provide an explanation for particular scores, but not necessarily for all scores. There should be adequate explanation as to how the score was reached There does not need to be a rescoring if there are reasons to justify the scores The answer cannot be simply that the score was accurate and reasonable 8 / Doc ID: L_LIVE_EMEA1: v2

9 Suitable Alternative Employment Dave has accepted the scores he has been given, and you have been consulting with him. You come across a role as Risk Manager for one of the companies in your group. You think this may be a suitable alternative role, and Dave applies for the role, along with other internal and external candidates. You attend the meeting where the decision is being taken about who to hire. Can you rely on subjective judgement in making the hiring decision? Samsung Electronics v Monte D Cruz Whilst an interview process should be as objective as possible, when assessing who will best perform in the role, some subjectivity is inevitable. Should follow interview good practice (agree criteria, agree Q&A s etc.) but failure to do so will not necessarily render interview unfair 9 / Doc ID: L_LIVE_EMEA1: v2

10 Recap: Collective redundancies Obligation to collectively consult is triggered when proposing to dismiss, as redundant, 20 or more employees at one establishment within a period of 90 days or less Election of employee representatives if necessary Provision of statutory information to appropriate representatives Consultation Protective awards 10 / Doc ID: L_LIVE_EMEA1: v2

11 Collective Redundancy: Case Study You are the HR manager for SANDS plc which has 20 stores located in different cities in the UK, selling toys. Some of the smaller stores have employees, whilst larger stores employ employees. Employees do not generally switch between stores, and you have a number of temporary staff as well, employed on fixed term contracts. Sales have fallen dramatically over the last six months, and proposals were made at today s Board Meeting that headcount is to be reduced by 20% in every store, within the next three months. (Headcount levels and budget are determined at Head Office level.) You are advising local Store Managers in each store on what steps they need to take to carry out a fair redundancy process. 11 / Doc ID: L_LIVE_EMEA1: v2

12 Collective Redundancy - Expiry of Fixed Term Contracts In one of your smaller stores, where there are only 22 staff, the Store Manager has a question for you about three people who are engaged on fixed term contracts which are due to expire in one month. One is covering a maternity leave, the other a sickness absence and the other is delivering a project. The manager wants to know whether they should be included in the numbers of people being made redundant for collective consultation purposes. What is your advice? University of Stirling v University and College Union Fixed term contracts that are agreed to end on an agreed date, or upon an agreed event are ending for a reason relating to the individual, because the individual agreed that this would happen, and therefore will not be counted as a redundancy However, expiry of a fixed term contract may be a redundancy if the reason for non-renewal is purely for business reasons. 12 / Doc ID: L_LIVE_EMEA1: v2

13 Collective redundancy - what is an establishment? The Store Manager for one of your smaller stores, which employs only 12 people, has asked whether he needs to collectively consult with his staff. What is your advice? Should the establishment be interpreted to mean the company as a whole, or is each store a separate establishment, in which case, this Store Manager need not collectively consult? USDAW and others v WW Realisation 1 Limited (in Liquidation) and another (relates to the Woolworths liquidation) Specific facts: employees worked at particular store (so not peripatetic), not mobile between stores, generally did not have mobility clauses either, important employment decisions were made at head office level rather than by store managers. Each store is a separate establishment Duty to collectively consult only applies to stores proposing to dismiss 20 or more employees 13 / Doc ID: L_LIVE_EMEA1: v2

14 Collective redundancy - What do you need to consult about? At the Board Meeting where the proposals were announced, the Board Members discussed the strategic and business decisions underlying the redundancy proposals. Do you need to collectively consult about these underlying decisions, or do you only need to consult about the consequences of these decisions? USA v Nolan (Court of Appeal) Reference has been made to the ECJ on this point But, safest course still remains that employers should consult on the underlying strategic and business decisions 14 / Doc ID: L_LIVE_EMEA1: v2

15 Collective Redundancy Election of Representatives In one of your larger stores, it is clear that you will need to collectively consult, so you begin an election process, inviting people to stand for election. You have decided that you need 5 representatives to be elected. 6 people nominate themselves for election. Can these people automatically be the elected representatives? Phillips v Xtera Communications Ltd Yes, they can be. On interpretation of s188 of TULRCA, EAT found that those who have nominated themselves and match the number of representatives required, can be the elected representatives, without the need for a ballot. 15 / Doc ID: L_LIVE_EMEA1: v2

16 Collective Redundancy Protective Awards You ve made it through the collective consultation process and have achieved the desired headcount reduction. However, one employee is not happy and has brought a claim for failure to properly consult. He is trying to claim a protective award for every employee that was dismissed (even though you have already resolved claims from a number of them). The Store Managers are very concerned about what this might cost them if he wins what is your advice? Independent Insurance v Aspinall An individual employee (who isn t an appropriate representative) cannot claim compensation on behalf of other dismissed employees 16 / Doc ID: L_LIVE_EMEA1: v2

17 Collective Redundancy Call for Evidence Government requested businesses to give evidence regarding collective consultation, by 31 January 2012 Factors that promote or impede consultation in general Effects of the lack of definition of establishment Impact of 90 day consultation period Impact of 90 day period for high impact redundancies high impact is not well-defined; it can be either high number of redundancies or high impact on economy. 30 day consultation period will not be changed Possible changes Statutory guidance as to definition of establishment Reduction of 90 day consultation period 17 / Doc ID: L_LIVE_EMEA1: v2

18 Questions? 18 / Doc ID: L_LIVE_EMEA1: v2

19 simmons-simmons.com elexica.com 19 / Doc ID: L_LIVE_EMEA1: v2