Although the news about the economy continues to be like the proverbial
curate’s egg – good in parts – the demand for legal advice about downsizing is
not letting up. Many companies have had to cut their costs base ruthlessly in
the last year, including staffing costs.
Individual Issues
Most employers will be familiar with the four-stage process for ensuring
that an individual redundancy is fair. Thus, for all employees with more than a
year’s service (who thereby have unfair dismissal rights) the employer must be
careful to ensure that (1) the redundancy is genuine (in accordance with the
legal definition), that (2) it has, in the selection process, acted objectively
and justifiably, both in terms of identifying the pool of candidates for redundancy
and their selection, that (3) it has consulted properly, and that (4) it has
taken all reasonable steps to canvass redeployment within the organisation.
Once all of these issues have been dealt with it can usually be fairly certain
that an employer will not be liable to an individual unfair dismissal claim.
The procedural aspects may be even less of a concern for employers once the
proposals in the Employment Bill are in force, which appear possibly to
downgrade the current stringent obligations concerning consultation.
Collective Issues
The evidence is that the employer’s wider obligations in respect of
large-scale redundancies are often ignored. Where 20 or more redundancies are
being considered within a period of 90 days at the same establishment, the
employer is obliged to undertake a collective redundancy consultation process,
as well as carrying out its individual consultation obligations.
This process can be time-consuming and rather bureaucratic, but vital in
ensuring that potentially large liabilities are avoided. In those
circumstances, the employers must consult, with a view to reaching agreement,
with either trade union representatives or, if there is none, with employee
representatives elected by the affected workforce. Employers without trade
unions will therefore need to factor in sufficient time both to announce and
hold elections for representatives. Recent case law has reinforced employers
duties to give sufficient time to allow everyone in the affected workforce to
hear about the elections and stand in them if they choose.
According to recent research, one-fifth of in-house lawyers have admitted
that they have been involved in sham consultation schemes, where selection
criteria were supposedly devised after redundancy decisions had, in fact, been
taken. It is clear, moreover, that many employers simply ignore the collective
obligations and routinely get away with it.
