What is a redundancy?
Although a redundancy only technically arises where a definition in the Employment Rights Act 1996 is met, in essence, redundancy arises when an employer’s need for a job no longer exists, work moves to a different location, or an employer needs a reduced number of employees.
What does a fair redundancy procedure involve?
Employers must conduct the redundancy process in a fair manner otherwise any dismissed employees with two years continuous employment will be able to challenge the fairness of their dismissal. The redundancy process must involve genuine consultation, objective selection (where appropriate) and consideration of alternative employment.
Where 20 or more dismissals are proposed at an establishment in a 90-day period, then collective obligations also arise, along with a duty to notify the government using an HR1 form.
If an employee has two continuous years of employment, they will normally be eligible to receive a statutory redundancy payment. Some employers enhance this or offer payments to employees who might not otherwise qualify but will usually require a settlement agreement as a condition of payment.
What does objective selection mean?
Keeping redundancy selection free from discrimination is best achieved using objective non-discriminatory criteria, generally focussed upon the competencies required for the roles remaining.
Employers must take particular care when handling redundancies because while seeking to avoid discrimination against one employee, it is easy to inadvertently discriminate against another. Below are some examples of discrimination featuring in redundancy selection:
- If an employee is selected for redundancy because of, for example, their race, then the decision will constitute direct discrimination.
- If a female employee is selected because, for example, she has childcare responsibilities restricting her ability to work overtime, then this decision is likely to constitute indirect discrimination because the employer is imposing a requirement placing women (who statistically speaking are predominantly the primary carers) with children at a particular disadvantage. An employer can only defend such a criteria if it is a proportionate means of achieving a legitimate aim.
- Taking into account disability absence (or for that matter maternity absence) in redundancy selection is likely to render the process discriminatory.
Legislation supplements these general principles with special rules obliging employers to take specific steps to correct disadvantage. For example, an employer must make reasonable adjustments to remove substantial disadvantage faced by disabled employees, which could mean adjusting a vacancy available for an employee facing redundancy to remove disability related difficulties, such as changing working hours or providing support to enable certain duties to be performed. Additionally, there are special rights for employees facing redundancy who are pregnant or are taking, or have taken, maternity, adoption or shared parental leave.
What special rights exist when seeking suitable alternative jobs for redundant employees who are pregnant or are taking, or have returned from taking, maternity leave, adoption leave or shared parental leave?
There is special protection that means qualifying employees are entitled to any suitable alternative vacancy in preference to other employees if their role becomes redundant.
For pregnant employees, this protection begins once they have notified their employer of the pregnancy and continues until 18 months have passed since the date of childbirth.
For those taking Adoption Leave, the protection is provided throughout the period of statutory leave and then following the return to work until a period of 18 months has passed since the child’s placement or the date that the child entered the UK, as applicable.
For those taking Shared Parental Leave, then if they are taking 6 or more consecutive weeks of statutory leave, but not taking either Maternity Leave or Adoption Leave, then the protection is provided during the Shared Parental Leave and until a period of 18 months has passed since the child’s birth or since the child’s placement or the date that the child entered the UK, as applicable.
What happens if an employer goes further than necessary and favours an employee because of a protected characteristic?
This can constitute discrimination. This potential pitfall is best illustrated by Eversheds Legal Services Ltd v De Berlin, where a male employee was found to have suffered discrimination when selected for redundancy in preference to a female employee on maternity leave. One of the selection criteria assessed the time taken to secure payment for each employee’s work. The male employee was assessed based upon his results, while the female employee received maximum marks because she had been absent on maternity leave. The Court emphasised that special treatment designed to avoid discrimination, must not favour an employee beyond what is necessary to compensate for the disadvantage. By elevating the female employee too far, the employer committed an act capable of amounting to sex discrimination – the male employee suffered less favourable treatment due to his gender. The Court considered that the employer should have found a less discriminatory way of removing the maternity leave disadvantage, for example, by measuring the performance of both employees at an earlier date when they were on an equal footing.