How to avoid employment tribunal claims when planning job cuts

Asha Kumar outlines the general principles and rules employers should follow during the redundancy process

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While the job market continues to look buoyant, some believe that raised interest rates and borrowing costs have led to a 60 per cent increase in planned redundancies in the last quarter. 

Redundancies and dismissals in general have been a hot topic in the media recently following the mass sacking of P&O Ferries staff, which highlighted the serious issues that can ensue when an employer gets the process wrong, purposely or otherwise. 

While every redundancy process and the circumstances will be unique to each business, there are a few general principles and rules that employers should follow to help them avoid employment tribunal claims when making redundancies.

What is considered a ‘fair procedure’ for redundancies?

Where small-scale redundancies of fewer than 20 employees are proposed, collective consultation obligations are not triggered. However, in such circumstances, it is still important that a fair procedure is followed before giving the employees notice of termination – failing which employers may be faced with unfair dismissal claims. 

The key to a fair procedure will be to give the employees adequate warning and to enter into meaningful consultation with them before any proposed dismissals take place. This is likely to involve several consultation meetings before any decision to dismiss is made and confirmed.

Consultation should include consideration of how the redundancies might be avoided or their effects mitigated. Employers should consider carefully and reply to any representations made by the employees during the consultation process. Even if it seems unlikely that another outcome can be reached, the consultation must be seen to be genuine and not a sham. This means employers should not enter into the process with a closed mind to possible alternatives to redundancy, such as reduced working time.

Selecting employees for redundancy 

It is good practice to ask for volunteers before making compulsory redundancies. However, for business-critical employees, businesses will need to make sure they can refuse any volunteers they do not want to lose.

Any method for selecting the employees to be dismissed must be fair and free from any taint of discrimination. This will include watching out for any selection method that could indirectly discriminate on the basis of disability or age. Employees should be able to understand why they have been selected and, if necessary, be able to challenge their selection during consultation.

Consideration should also be given to employees who are on sick leave or maternity leave as they need to go through the same fair process as other employees as much as possible. This will include being consulted with, and women on maternity leave must be offered any suitable alternative positions before other affected employees.

All employees in the redundancy process should be given a right of appeal against any decision to dismiss them as redundant.

Alternatives to redundancies 

Organisations also need to keep an open mind about finding suitable alternative employment for employees who are being made redundant. This extends to vacancies with associated employers; for example, other companies within the same group. It is best practice for employers to let staff know about all vacancies – even if these are more junior than the position they are leaving.

Any alternatives considered need to make commercial sense, but they will also assist with demonstrating that the redundancy is genuine. 

Whether the predicted rise in redundancies comes to fruition remains to be seen. However, in times of economic difficulty, employers may think they can short cut the redundancy process, especially when the business’s future is looking rocky. An adverse economic climate is not a sufficient reason to forgo a fair redundancy process unless employers are prepared to run the risk of claims being brought.

Asha Kumar is an employment partner at Keystone Law