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Redundancy payments under dismissals...

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Dismissals - Redundancy Payments What is “Redundancy” – s 139 ERA 1996 ‘an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to— Gives 3 situations of redundancy: (a) the fact that his employer has ceased or intends to cease— (i) to carry on the business for the purposes of which the employee was employed by him ((A) JOB REDUNDANCY), or (ii) to carry on that business in the place where the employee was so employed ((B) PLACE OF WORK REDUNDANCY), or e.g closing Birmingham place shop, not Manchester shop (b) the fact that the requirements of that business— (i) for employees to carry out work of a particular kind… ((C) EMPLOYEE REDUNDANCY).... have ceased or diminished or are expected to cease or diminish.’ e.g. business carrying on in all placements, but there’s too many staff, need for less so staff reduced Redundancy – Legal Issues • Redundancy Payment • Consultation requirements • Unfair Dismissal Redundancy or Reorganisation – Difference? Redundancies

Reorganisations (same amount of work, just reorganised, put somewhere else)

See s 139 ERA 1996 Definition

No set definition

Employee may be liable for redundancy payment

No eligibility for redundancy payment

Unfair Dismissal? – Potentially fair ground for dismissal

Unfair dismissal? – Dismissal only fair if for “Some other Substantial Reason”

Collective consultation rules may apply

May still require collective consultation (TULR(C)A 1992: defines ‘dismiss as redundant’ as a dismissal for any reason for reasons not related to the individual concerned (such as a business reorganisation)

Redundancy 5 step approach –

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Eligibility Dismissal Redundancy situation Alternative job offer Redundancy payment

Redundancy Payment: Eligibility to Claim • Employees only, not workers • Qualifying period of employment: 2 years – s 155 ERA 1996 • Not an excluded employee Redundancy 2 - Dismissal – s 136 ERA 1996 • Actual Dismissal • The end of a limited-term contract • Constructive dismissal Redundancy 3 - Redundancy Situation Section 139 ERA 1996 Must be one of the three situations, explained further up Redundancy 4 - Offer of Alternative Employment? • Section 141 ERA 1996 • Can reject or accept offer • If it was a reasonable offer and the employee rejects it, then they lose any entitlement to any payment • Conditions to comply with under statute • In assessing whether reasonable to refuse offer: o Consider suitability of alternative role (objective test)  Taylor v Kent CC  School headmaster was going to be made redundant  Was given offer to be a sub teacher  Not reasonable, big demotion, very diff pay o Reasonableness of employee’s refusal (subjective test)  Thomas Wragge v Wood  Employee due to leave after being told they were being made redundant, already found a new job  Day before employment was to finish, employer offered alternative role  Tribunal found reasonable to refuse, met first test but bc it was such a last min offer, employee was still entitled to their payment o Other things that might factor in:  Travel  Hours • Trial Period – s 138 ERA 1996  In a lot of cases, might be difficult for employee to decide whether new job is suitable without trying it

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This section allows for trial period And allow for extension – limited

Advice Activity Joanne is employed on the production line in a factory. The factory is to close, but she is offered an alternative role in her employer’s other factory. The role and pay are the same, but the factory is ten miles away, and difficult to access via public transport. Whilst Joanne can currently walk to work, there would be a 90 minute journey each way to the new workplace. Advise Joanne • Assume she is an employee with 2 years • Dismissal is she doesn’t take job • Redundancy – place of work one • Whether role is suitable is to be considered • Objective test: seems suitable, same factory work and same pay at level • Subjective test: whether reasonable to refuse  factory is far and difficult to access by public transport • Will depend on ET’s view – longer journey doesn’t automatically make it reasonable, look at personal reasons such as if she had childcare reasons • Should advise for a trial period of 4 weeks to see • Without this as well, may be uncertain that she would succeed that she was entitled to refuse it and receive pay __________________________________________________________________________ Redundancy 5- Redundancy Payment • Note: Same as unfair dismissal basic award • S.162 ERA 1996 • One week’s pay (max £538) x years of service (max 20 yrs) • Multiplier adjusted for age (over 41 = x 1.5) • Maximum = £16,140 Example Jay has been made redundant. He worked for his employer for 10 years, and was paid £600 per week on termination of his employment. He is aged 46. • Weekly pay x years of service • Maximum for week pay is £538 and for years of service it is 20yrs service • Older employee over 41, for every year over this age, get 1 and half weeks’ pay, so x1.5 instead of 1 week • Maximum anyone can receive is £16.140 • stat only allowed £538 per week • Over 41, he is 46, so add 5 years after he was 41 and 5 before he was • 538(weekly pay) x 5(years of service) £2690 (years below age of 41) • 538(weekly pay) x 5(years of service) x 1.5(over 41) = £4035 (years above 41) • Total redundancy pay = £6725 Unfair Dismissal: Remedies

Remedies

Reinstatement

Reengagement

Compensation

Basic award (Week 8)

Compensatory award

Collective Consultation • Covers redundancy and also re-organisations • Not in every case – only where proposing to dismiss 20 or more employees at one establishment within 90 days • For small redundancy, no need for collective consultation • Duty to consult with employees’ representatives e.g., a trade union or representatives appointed amongst group • Penalty for non-compliance – protective award • Time scale – different on how many employees being made redundant  E.g., more than 100, consultation must begin 45 days before dismissal, if 2099 then 30 days before first dismissal • Consultation requires, info to representative of: explaining background to redundancy, discussion about ways of avoiding or reducing number of redundancies, or strategies to reduce bad effects of redundancies • Doesn’t actually change much, but employer legally required to • If employee made redundant where consultation didn’t happen, possible to bring claims – protective award - Penalty for non-compliance • Can be compensation pay which can be costly Individual Consultation 1 Begins with a staff meeting at which the employer informs staff of the following: • the reasons for redundancy • the numbers expected to be dismissed • who is in the pool of employees at risk • the consultation period • the process of selection, including the criteria for assessment and the timetable • the right of appeal • opportunities for redeployment (alternative roles with same employer) • that there will be individual consultation and further open meetings • staff should be given the opportunity to ask questions

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Letters to individual employees: o confirming that they are at risk of redundancy

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o informing employees in selection pool of risk of redundancy o identifying the options of voluntary redundancy, redeployment and compensation for redundancy o referring to further meetings to consult on an individual basis (with the right to be accompanied) A further staff meeting giving more details of the forthcoming assessments Carry out a fair selection process Consider alternatives to redundancy Hold individual consultation meetings to discuss selection for (and alternatives to) redundancy Issue notices of dismissal (with or without notice) Allow the right of appeal

Unfair Dismissal Claim on Redundancy The reason for the dismissal= Redundancy

Eligibility

Dismissal

Rem edies

The reasonableness of the dismissal

Unfair Dismissal • Must be a genuine redundancy situation • If so, a potentially fair reason for dismissal, but must ensure procedural and substantive fairness • ET will consider band of reasonable responses • Williams v Compair Maxam: For fair dismissal in redundancy situation o Was a redundancy situation, manager made very quick decisions about who theyd keep and get rid o Q for ET was whether it was adequate, fair and reasonable or was there a greater level to be followed Set out 3 key requirements, the employer must (1) Warn the employees of the impending redundancies and consult with them; (2) Adopt a fair selection procedure; and (3) Take reasonable steps to avoid or reduce redundancies by considering alternative employment. • Confirmed by HL in Polkey v AE Dayton Services Ltd If these are all followed, won’t be an unfair dismissal Redundancy Process - (fair selection procedure) • Determine “pool” for selection – group at risk • Determine selection criteria

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Must be fair: (must be objective and measurable) – Skills, qualifications and aptitude – Standard of work and/or performance – Disciplinary record – Attendance record? – Length of service? o Last two may be difficult, possible discriminations such as absence due to disability or pregnancy o Also those hired more recently and being made to go may be discrimination such as age discrimination, younger staff have less years of service compared to older Automatically unfair selection criteria? – Pregnancy, including all maternity reasons – Family reasons, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants – Acting as an employee representative – Acting as a trade union representative – Joining/not joining a trade union – Being a part-time or fixed-term employee Particular risks – disability and maternity...