DBS Law Ltd

Redundancy – Avoiding the pitfalls

The number of unfair dismissal claims rose from 40,900 in 2007-8 to 57,400 in 2009/10. Greater rights-awareness coupled with the difficult job market means that redundant employees are more likely than ever to bring claims against their former employers. It makes good financial sense for employers to make sure that they get their redundancy processes right, given that the average award for a successful claim in 2009/10 was £9,120, not to mention the additional legal costs.

In order to fairly dismiss an employee for redundancy, you must be able to show that it is a genuine redundancy situation and that a fair procedure was followed in making the dismissal. Frequently, unfair dismissal claims succeed on procedural technicalities. Below are some of the most common pitfalls and how to avoid them:

• Making the pool too narrow. In establishing the pool, look carefully at what the employees do on a day to day basis (looking beyond the job title) and the extent to which their jobs are interchangeable.
• Discriminatory selection criteria. The criteria must be objective so avoid discriminatory criteria. ‘Last in first out’ may indirectly discriminate against younger or female workers and should not be the sole or main criteria. When scoring ‘absence’, reasonable adjustments may have to be made if the absences were for reasons connected to disability. Pregnancy or family related absences should be disregarded completely.
• Failing to offer alternative employment. Consider whether you have any suitable alternative vacancies for affected employees. Women on maternity leave should be given first refusal.
• Presenting a fait accompli. Approach consultation with an open mind and consider revising scores as appropriate. Never give the impression that a final decision to make anyone redundant has been taken, until the consultation is complete.
• Failing to consult properly.  Allow plenty of time for the consultation process. Following the initial group meeting, two individual consultation meetings should take place so that the employee has the opportunity to present their objections and ideas. Always offer the right to be accompanied by a colleague or trade union rep at individual meetings. Note that 20 or more redundancies within a 90 day period will be subject to ‘collective consultation’.
• Failing to keep a paper trail. Keep detailed notes at every stage of the process as these may provide useful evidence that the process was handled fairly and objectively. Put all correspondence to employees in writing.
• Forgetting absent employees.Remember to consult and correspond with affected employees who are absent, e.g. on holiday, maternity leave or long term sick leave.
• Failing to adhere to policy. Follow your existing redundancy policy e.g. where the policy states that there will be a right of appeal, this should be offered (although it is best practice to offer a right of appeal in any event).
• Failing to take legal advice. Carrying out a redundancy process fairly can be a complicated task. Make you seek legal advice before you begin in order to minimise the risks.