With the Coronavirus Job Retention Scheme (CJRS), also known as furlough, coming to an end on 30th September, many businesses are unfortunately being forced to look at making previously furloughed staff redundant.
Redundancy is obviously a delicate process that’s important to get right, but not many businesses do. There are a number of pitfalls you can fall into quite easily, which could leave you exposed to claims of unfair dismissal and ultimately, significant costs. At the beginning of this year, there was a significant increase in the number of tribunal cases compared with 2019/20 – with the average case taking 43 weeks to .
And it’s not just time that a tribunal will cost you. In 2017, the British Chamber of Commerce estimated that on average, tribunal proceedings cost businesses £8,500. Complex cases come with legal fees of anywhere up to £30,000, and that’s before any reparations or compensation that would be paid out should the claimant succeed. In August this year, Sally-Anne Shipp, a marketing director at logistics business City Sprint was awarded £30,000 after being made redundant whilst on maternity leave.
By following the correct steps you can make redundancy a less painful process for both you and your employee.
With that in mind, here are 4 pitfalls to avoid during a redundancy process, and some steps you need to follow to ensure fairness and protect the rights of your employees and your organisation.
No plan or policy
Many businesses may find themselves thrust into a situation where they are having to make quite rapid and tough decisions regarding redundancy. But having no formal policy or plan can leave you exposed to potential claims. A lack of communication with employees breeds uncertainty, which puts the culture and morale of the entire organisation in jeopardy. Missing a vital step in the process leaves you exposed, so having a clear plan and policy in place helps you to map scenarios out and ensure you are following requirements to the letter.
How to avoid
It’s all about communication and clarity. You need to be able to demonstrate and communicate to your employee(s) and any representatives that you have followed a fair, logical process and that redundancy was the right option. If you don’t have a dedicated HR resource or experience of carrying out redundancies in your business, an external partner like Talk Staff can support you with putting together a plan and policy that you will follow.
Reasons for selection and role crossover
The guidance for ensuring a fair dismissal is that the business should go through a selection process that considers the length of service, disciplinary records, performance, and making voluntary redundancy an option. A selection process doesn’t need to be followed or demonstrated if a whole department is being closed or an employee is the only one in a department. A very common pitfall that businesses fall into is not properly communicating that a defined group of roles is at risk of redundancy. They may inform one employee that they are being made redundant under the assumption there is no other role like theirs in the business, but if there is in fact some potential crossover with other roles, those employees should be included in the ‘at risk’ pool too.
How to avoid
To ensure an employee’s dismissal is fair in this regard, you need to get into the extreme detail of what your employee’s role is and where it might crossover with others. If even the slightest potential crossover is identified, additional work may be required to either make your case that the roles are sufficiently different, or to expand out the redundancy pool.
Protected characteristics and statutory rights
Another important consideration when selecting employees for redundancy is protected characteristics, and properly understanding whether an employee has been granted their statutory rights. Protected characteristics are specifically outlined in the Equality Act 2010, and as such it is against the law to discriminate against employees on the basis of them.
Protected characteristics include:
- Gender reassignment
- Marital status
- Sexual orientation
- Religion or belief
- Pregnancy or maternity
If an employee believes they have been discriminated against in regards to selecting them for redundancy, they can claim unfair dismissal.
Employees can also claim discrimination and unfair dismissal if other statutory rights have not been considered or met. For example, if they submit a flexible working request after the (currently) statutory 26 weeks, which you have not dealt with or responded to, and then choose to make the employee redundant, then they can claim automatic unfair dismissal.
How to avoid
You need to properly understand the rights of your employees, and ensure they have been met prior to them being selected for redundancy. The consultation period is again key in outlining the reasons for redundancy and explaining the process, and thus demonstrating to the employee they are not being discriminated against. You should also check if they have made any statutory applications or that other rights have been considered prior to making them redundant. Again, if you do not have a dedicated resource, an external HR consultant can help you to identify potential issues in this regard.
- Having an existing redundancy policy and a full redundancy plan in place is key to ensuring you are following the necessary steps
- You should ensure that the pool of roles at risk of redundancy has been properly considered and notified
- The consultation period is a key process that enables you to communicate with clarity and avoid any confusion or accusations of discrimination
It is very important to be sensitive to an employee’s protected characteristics and statutory rights when they are being considered for redundancy
Talk Staff are people and HR specialists, and we can support you with completing a redundancy project. By running a redundancy project with us, we can help you to avoid the risk of unfair dismissal claims and unnecessary stress and costs.
This article is for general informational purposes only. The legal information is provided for general informational purposes only and is not a substitute for professional legal advice. Before taking any actions based upon this information, we encourage you to consult with appropriate legal professionals. The use of or reliance on any information contained in this article is done so at your own risk, and we shall have no liability to you for any loss or damage incurred at the result of using the information provided.