Any changes to the structure of your organisation will nearly always have an effect on your workers. Some changes will be embraced in a positive manner; others less so and these may result in you needing to bring the employment relationship to an end.
Our specialist employment team can assist you with these changes, for example:
- Advising about the proposed new structure and the impact on individual employees
- Identifying whether a redundancy situation applies or ‘some other substantial reason’ to justify any dismissals
- Advising about changes to terms and conditions of employment
- Advising in the context of insolvency proceedings
Our redundancy solicitors have put together these guidelines to walk you through redundancy procedures, if you need additional advice they can help you with that too.
Redundancy occurs in three different types of situation:
- Business closure
- Workplace closure
- Reduction of workforce
The starting point is to consider whether you can avoid making compulsory redundancies or reduce the number needed. For example, this can be done by:
- Suspending or restricting recruitment
- Reducing or removing overtime opportunities
- Not renewing contractors’ contracts
- Ceasing or reducing the use of agency workers
If you intend to make 20 or more employees redundant over a period of 90 days or less, there are things you must do – inform and consult appropriate employee representatives and also tell the Department for Business, Innovation and Skills (BIS). If these steps are not taken, an employment tribunal can award up to 90 days’ pay for each employee and you can also receive a fine.
Redundancy is a potentially fair reason for dismissal. You will need to demonstrate that you have:
- Identified an appropriate pool of employees for selection for redundancy
- Consulted with the individuals in the redundancy selection pool
- Applied objective selection criteria to the employees in the redundancy selection pool
- Considered suitable alternative employment where appropriate
It’s also important to ensure that you follow a fair process, which usually includes setting out in proper written detail the basis for the proposal, meeting with each employee and consulting with them (and potentially their representatives) before any decision is confirmed in writing.
When is it unfair redundancy selection?
There are definitely situations where the selection of a person to be made redundant is automatically unfair. This will be the case if they are selected:
- For a reason connected to pregnancy
- Because they refused to sign a working time opt-out agreement; or
- For reasons related to trade union membership or activities.
However, it’s important to note that selection can be unfair in other cases, for example, where selection scores do not reflect a fair representation of the employees and results in the wrong person being chosen.
Employees will be entitled to statutory redundancy pay if they have at least two years’ continuous employment. This can be calculated here – https://www.gov.uk/calculate-your-redundancy-pay/y. A contractual entitlement may also apply under the terms of their employment contract.
Restructuring and reorganisations
You may have identified that the structure of the organisation, or a part of it, needs to be changed. For example, this could be because new technology has led to new methods of working or a team organised in a different way will best meet the demands of a customer.
If the change does not fall within the definition of redundancy (see above), but necessitates the dismissal of any employees, this will be for ‘some other substantial reason’ under the Employment Rights Act 1996. Again, it’s important that you are able to justify the decision and also that you follow a fair process.
Changing terms and conditions of employment
Click here for further information about changing terms and conditions of employment.
There are specific provisions around redundancies, business reorganisations and TUPE when an organisation is in a ‘distressed’ state. These will depend on the nature of the insolvency proceedings and whether any part of the organisation can be rescued.
We work alongside insolvency practitioners to guide them through the employment laws and processes when dealing with employees of distressed businesses.
For more information on TUPE, click here.