1 Guidance note on dealing with redundancies from a pool of employees (for less than 20 people) Always check the terms of any collective agreement which may apply. Royds Withy King can provide suggested letters for each stage of the process. A. Is it a redundancy situation? Do you: intend to close the business or part of the business the employees work in? intend to close the place where the employees work (e.g. one of your sites)? need less employees for the available work than you have done previously? (This could be due to several reasons such as a slow down in your business or because you have brought in new equipment and therefore need fewer employees to do the work.) If so, you will need to consider making redundancies. You should never be seen as having made a final decision about making redundancies until you have exhausted the consultation process outlined below, otherwise the consultation may be deemed a sham by an Tribunal. This will mean the dismissals are at least procedurally unfair which may lead to compensation being awarded against you. Therefore, whenever you mention redundancies to your employees when making announcements or during consultations, you should talk about potential or possible redundancies. B. Minimising redundancies: In determining whether you acted fairly in dismissing an employee for redundancy, an Tribunal will look to see whether you took steps to minimise the need for making redundancies. You should therefore consider the following: putting restrictions on recruitment retraining and redeployment to other parts of the organisation reduction/elimination of overtime introduction of short time working or temporary lay off (if provided for in contracts or by an agreed variation to the contract) seeking applicants for early retirement or voluntary redundancy, and termination of the employment of temporary or contract staff.
2 C. Pool of selection: You will need to ascertain which employees should be selected for redundancy. You cannot merely choose the employees who you wish to dismiss for redundancy. You must be objective in selecting the individuals. You should first begin by identifying the group of employees from whom the redundancy selection will be made. This is the pool of selection. If you need to reduce numbers generally, it s possible that most of your staff will be in the pool of selection. If you have identified a particular area of the business in which you need to reduce numbers e.g. the sales force, you will only need to put the sales force in the pool of selection. In deciding who will be in the pool, the following factors will be relevant: whether other groups of employees are doing similar work to the group in the pool whether employees jobs are interchangeable, and whether the employees inclusion in the pool is consistent with their previous positions. You should therefore consider not only those employees doing the same work, but those doing similar work or whose skills are interchangeable, irrespective of job title or department. (We strongly advise that you take advice from a member of the specialist team at Royds Withy King in order to ascertain those employees to be put into the pool of selection). D. Selection criteria: You will need to consider the selection criteria that will be used to determine which employees from the pool will be provisionally selected for redundancy. The criteria must be objective. It should not merely reflect the personal opinion of the selector but should be verifiable by reference to data such as records of attendance, efficiency and length of service. Criteria often used are as follows: disciplinary record attendance record you should ignore any absences relating to an employee s disability (Please seek further clarification from Royds Withy King if you intend to use this criterion.) skills and experience this criterion should be clearly defined and wherever possible you should rely on evidence corroborating your decision (e.g. by reference to recent appraisals, work output etc.), and flexibility/adaptability e.g. willing to work overtime as and when required. This is potentially problematic since it could be seen as subjective and possibly discriminatory. (Please ask for advice from Royds Withy King if you intend to use this criterion.) The purpose of having objective criteria is to ensure that employees are not unfairly selected for redundancy. The chosen criteria must be consistently applied to all employees. It s possible to weight the criteria used according to the importance to the company as long as you act from genuine motives. A matrix should be put together in order to score the individuals in the pool of selection. At this stage the criteria should be in draft form as you will need to consult with the employees about the appropriateness of each criterion.
3 E. Put employees at risk of redundancy: When you have established the pool for selection, you should advise all the employees in the pool that they are at risk of redundancy. You must be careful to state that you are considering redundancies rather than that you have concluded that you must make redundancies. Otherwise, the consultation process you follow will be a sham and the dismissal is likely to be unfair. Following the at risk meeting, you should send a letter to each employee confirming the position. Include (where appropriate) in the letter the following points: that their job is at risk of redundancy that you anticipate having to make redundancies in the near future and the anticipated number of redundancies brief reasons for making redundancies how you identified the pool of selection how long you anticipate the consultation period will last and when the first consultation meeting will take place that the purpose of the consultations will be to discuss the selection criteria used to select employees for redundancy, to discuss ways of avoiding redundancies and an examination of whether it is possible to find alternative employment within the organisation, and you may wish to add that you are seeking volunteers for redundancy but reserve the right to reject any applications in order to maintain the required skill set within the business. (You could ask for a response before beginning the individual consultation meetings. If you have enough volunteers for redundancy you can accept the applications and notify the remaining staff that they are no longer at risk). F. Consultation: If you do not receive any/enough volunteers for redundancy, you will need to make compulsory redundancies. You will need to start the process by having individual consultations with the employees in the pool of selection. At the first individual consultation meeting you should explain the reasons for considering making redundancies and the criteria you are intending to adopt. You should consult with each employee about ways of reducing the number of people to be made redundant and ways of mitigating the effects of potential redundancy. Take a note of the meetings, including feedback as to the fairness of the selection criteria used. If the employees express concerns about the criteria used, you should consider amending it. Having had a consultation meeting(s) to explain the selection criteria and made any subsequent amendments to the criteria, you can move on to the scoring process. G. Scoring: You will need to score the individuals against the selection criteria in order to ascertain which employees are provisionally selected for redundancy. In order for the scoring to be as fair as possible, it s best if two people score the individuals separately without conferring with the other scorer. You should then take the average score for each person. This will be evidence of impartiality if the employee makes a claim for unfair dismissal. You should also ensure that the information you rely on to score the individuals is accurate.
4 Once you have completed the scoring process, those employees scoring the lowest number of points will go forward to the final stage of consultation. The number of candidates you choose will depend on how many redundancies you need to make. You should notify the employees who score the lowest that they have been selected for the final stage of redundancy consultation. You will need to provide them with the breakdown of their personal scores against each criterion and invite them in writing to a further consultation meeting to discuss their score. H. Further consultation meeting(s): Discuss the employee s individual scores: You must give the employee the opportunity to comment on their individual score against each criterion. This procedure should be followed in order to highlight any mistakes you may have made with the scoring and to allow the employee the chance to dispute any of the scores or make any representations about their performance which you should take into account. You are not required to tell the employee the threshold score they had to reach in order to be safe from redundancy or any of the other employees scores. If any of the employees highlight any mistakes at this point you may need to re-mark. This may mean that the employees selected for the final consultation change. You should only proceed to discuss alternative employment once any issues on scoring have been resolved. This may mean having to adjourn the meeting and reconvene later. Discuss alternative employment: You will need to consider alternative employment for this employee. Where alternative work is available within the employer s own organisation or with an associated company, the employee should be given sufficient details to enable them to decide whether to accept the role or not. The search for alternative employment should extend, if possible and appropriate, throughout the group of which the company forms a part. If there are vacancies (even if they are of a lower grade and seemingly unsuitable) you should notify the employee of the vacancies and ask if they want to apply. Retraining opportunities should be identified and the practicability of such vacancies should be considered, especially in relation to expense. Once you have had the further consultation meeting(s) with the employees who have been provisionally selected for redundancy, addressed any issues that they have raised and concluded that there are no suitable alternative vacancies, you can move on to the dismissal process. I. Notify those not selected for redundancy: Once you have discussed the scores with the individuals selected for the final stage of the redundancy consultation and you are satisfied that your scoring is accurate, you should notify those no longer at risk that their jobs are safe.
5 J. Job offer: If you have a suitable vacancy, the offer of employment should be put in writing, even if you think it may be rejected. The offer should show how the new role differs from the old role and the offer must be made before the employment under the previous contract ends. The offer must be for the new job to start either immediately after the end of the old job or after an interval of no more than four weeks. K. Unreasonable refusal: Employees who unreasonably refuse an offer of suitable alternative employment may lose any entitlement to redundancy pay. A refusal may be unreasonable where the differences between the new and old jobs are negligible or where the employee assumes rather than investigates the changes that a new job might involve, for example in travelling time or working conditions. Refusal may be reasonable if the new job would cause domestic upheaval, for example if there is a considerable change in working hours or a need to move house. L. Trial period: Where a suitable alternative role is offered to an employee under notice of redundancy, they have a statutory right to a four week trial period in the new role. This applies where the terms of the new contract differ from the old contract. The trial period will begin when the previous contract has ended. The effect of the trial period is to give the employee a chance to decide whether the new job is suitable without losing the right to a redundancy payment. The four week trial period can be extended for retraining purposes by an agreement which is in writing, specifies the date on which the trial period ends and sets out the employee s terms and conditions after it ends. If the employee works beyond the end of the four week period or the jointly agreed extended period, any redundancy entitlement will be lost. This is because the employee will be deemed to have accepted the new employment. You should communicate this to the employee when the alternative job offer is made. You should also use the trial period to assess the employee s suitability. Should you wish to end the new contract within the four weeks for a reason connected with the new job, the employee will still have the right to a redundancy payment under the old contract. If the dismissal was due to a reason unconnected with redundancy, the employee may lose that entitlement. M. Dismissal process: Once you have completed the consultation and determined that there are no alternatives to redundancy available, you must inform the employee of the outcome. You will need to invite the employee to a final meeting and advise them in writing of their right to be accompanied to this meeting by a colleague or a trade union representative. In the final meeting, you should explain the employee s termination on grounds of redundancy. You will need to give them notice to terminate their employment (as specified in their contract or the statutory minimum notice period whichever is longer). Specify the statutory redundancy payment that will be made to them (if any). You can only give notice terminating employment after you have given the employee sufficient time in consultation to put forward their issues, suggestions and concerns. You will need to confirm the dismissal in writing following the final meeting. You should notify the employee of their right to appeal against the decision if they are not satisfied with it (see guidance on appeals below). Employees who are under notice of redundancy have a statutory entitlement to a reasonable amount of paid time off to look for another job or to arrange training. This only applies to employees who have been continuously employed for at least two years. Where possible, employers should extend such assistance to all employees who are affected by redundancy. The time off must be before the expiry of the notice period.
6 N. Appeal: In order for the dismissal to be fair, you must inform the employee of their right to appeal against the decision. A more senior manager should consider the appeal, if possible. An appeal meeting will need to be held and the outcome must be given in writing. O. Mitigating the effects of redundancy: Employers should try to mitigate the effects of the redundancy by helping employees find other work, such as: contacting the local Jobcentre which provides a free service for bringing together employers with vacancies and people looking for work contacting other local employers with a view to canvassing for any vacancies which may be offered to the redundant employees, and giving redundant employees first option of re-employment should there be an upturn in business. Counselling Larger companies may wish to provide facilities for a counselling service on site to give those employees who are to be made redundant the following: financial advice guidance on how to find another job advice on completion of application forms, and guidance on attending interviews. Royds Withy King is the trading name of Withy King LLP, a limited liability partnership registered in England and Wales with registered number OC Withy King LLP is authorised and regulated by the Solicitors Regulation Authority. The term partner is used to refer to a member of the Withy King LLP or an employee or consultant with equivalent standing and qualification. A list of members is available at the registered office 5-6 Northumberland Buildings, Queen Square, Bath BA1 2JE. Information contained in this communication does not constitute legal advice. All statements of law are applicable to the laws of England and Wales only.