Employment law clinic No 9 Redundancy procedures

The Challenge: A company has to make cutbacks before the end
of the year. It is expected that over 20 employees will have to be made
redundant. One of the employees who may be made redundant is on maternity
leave. Sue Nickson, partner and head of employment law at Hammond Suddards
Edge, weighs up the issues.

Legal issues

– Section 188 of the Trade Union and Labour Relations (Consolidation) Act
1992 provides that where an employer is proposing to dismiss as redundant 20 or
more employees at one establishment within a period of 90 days, collective
consultation shall take place with representatives of the affected employees.
If there are less than 100 proposed redundancies, the collective consultation
period should last for a minimum period of 30 days. The Collective Redundancies
and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations
1999 provide that this consultation must be with a union if one is recognised
in respect of these employees. If no union is recognised, the employee must be
given the opportunity to elect representatives if no suitable representative
panel is in existence. These regulations also provide that it is the employer’s
responsibility to make arrangements for the election, ensure all affected
employees are represented and the election is fair.

– The company will have to consider the pool of employees from which the
employees will be selected for redundancy. The company will have to consider
what selection criteria will be adopted and will have to ensure that such is
objective and applied fairly. Care should be taken not to apply selection
criteria that would be indirectly discriminatory. In the case of Whiffen v
Milham Ford Girls’ School 2001, the redundancy policy provided that employees
who were not on permanent contracts would be selected for redundancy before
those employees on permanent contracts. The employer had failed to consider
that there were more women than men from the pool of teachers on temporary
contracts. This amounted to indirect sex discrimination which was unlawful, as
the employer was unable to show that such a policy was justified.

– The consultation process should look at ways of avoiding redundancies,
reduce the number of redundancies and minimise the effects of redundancy. In
Middlesborough BC v Transport and General Workers’ Union and another 2001 the
EAT found that the council had failed to properly consult the trade union in
respect of more than 100 employees it was proposing to make redundant, about
ways of avoiding the dismissals. The employer’s belief that there was no
alternative to redundancies did not prevent the finding that the consultation
that had taken place was a sham. The employer had mistakenly consulted about
ways of reducing the number of employees to be dismissed, and mitigating the
consequences of the dismissal, without genuinely consulting about the principle
of whether to declare redundancies at all.

– The employee on maternity leave should not be excluded from the
consultation process otherwise there may be grounds to claim sex
discrimination. In McGuigan v T G Baynes & Sons 1997 it was held that the
employer’s failure to consult an employee about her impending redundancy
amounted to direct sex discrimination, as the effective cause of the failure
was that it was hoped she would not return to work after maternity leave.

– Regulation 10 of the Maternity and Parental Leave Regulations 1999
provides that if there is a suitable alternative vacancy it should be offered
to the employee on maternity leave. Failure to do so will amount to an
automatic unfair dismissal.

HR issues

– The company should consider whether there is already a consultative
body/committee that could represent the affected employees in the absence of
recognition. What is its present remit?

– Ensure adequate arrangements are made for the election, consider secrecy
of the ballot, the numbers of representatives that will be required, whether
all employees will be represented, bearing in mind the physical location and
grading of the employees.

– Provide facilities for representatives, at a minimum this should include a
room for meetings and so on. Consider training facilities; remember that
elected representatives will have the right to paid time off in the same way as
union representatives.

– The duty to collectively consult does not mean that the duty to
individually consult can be ignored and arrangements should be made to speak to
the affected employees accordingly.

– The employee on maternity leave should be contacted. This could initially
be done by letter but an employee on maternity leave should be consulted to the
same level as an employee actually at the workplace. Face-to-face meetings
should be arranged. The employee may refuse to attend such a meeting but would
later find it difficult to claim that the company had failed to adequately
consult.

– The company should consider outplacement counselling. It should be
remembered that employees under notice of redundancy have the right to paid
time off in order to find employment, though this right is subject to two years
qualifying service and the right to pay is limited to 40 per cent of the weekly
wage.

Sue Nickson, Partner and national head of employment law at Hammond
Suddards Edge

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