Redundancies: Lessons Learnt From The Recession

With economic uncertainty set to continue into 2012, redundancies and other cost-cutting measures are likely to remain firmly on the agenda. But if these measures are not implemented properly, the consequences for an employer can be significant and expensive.

With this in mind, we have set out below some "dos and don'ts" gleaned from the case law and practical experiences since the down-turn in 2008.

  1. Do consider collective consultation obligations, if applicable

    Where an employer dismisses as redundant 20 or more employees at any one establishment within a period of 90 days, that employer must undertake a collective consultation process either with the recognised trade union or representatives elected for the purpose.

    20 - 99 dismissals: 30 day consultation period

    100 + dismissials: 90 day consultation period

    "Dismissing as redundant" is defined widely as "dismissals for a reason not related to the individual concerned". This includes (i) the non-renewal of a fixed term contract and (ii) dismissing an employee in order to re-hire them on new terms and conditions, to give effect to a change to contractual terms in circumstances where the employee is unwilling to consent.

    There is a penalty of up to 90 days' pay per affected employee for failure to undertake collective consultation and the Tribunals tend to take a punative approach to the imposition of such penalty.

  2. Don't forget to follow a fair process

    Even if the collective consultation process does not apply, an employer will need to consult individually with affected employees when a redundancy proposal arises. Employers should consult regarding:

    The reasons for the redundancy; Ways of avoiding the redundancy situation; Pooling and selection; The availability of suitable alternative employment; and The redundancy terms to be applied. A fair process also encompasses other matters such as ensuring employees are selected fairly for redundancy. A failure to follow a fair process will render a dismissal unfair. We can provide checklists and standard letters to help you achieve a fair process.

  3. Do take account of discrimination laws

    Before you commence any redundancy consultation process, consider whether you have any employees at risk of redundancy who have any "protected characteristics" (such as disability, sex, pregnancy, etc.) who might be put at a disadvantage during the redundancy process when compared with other employees, as a result of that characteristic. In particular:

    Bear in...

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