Advice

Redundancy FAQs: how to run a fair process

28 Jul 2020 By Elizabeth Howlett

People Management asks experts for guidance on some key questions, including on making a justifiable case, selection criteria and avoiding reputational damage

Redundancy is fast becoming an unfortunate reality for thousands of British workers as the government’s furlough scheme winds down and the realities of coronavirus-related financial difficulties set in. Experts predict the UK’s unemployment figures will deteriorate rapidly over the rest of summer and autumn, with a worst-case scenario reflecting unemployment levels akin to those seen in 1980. 

Making redundancies is never an easy task, and getting it wrong can result in legal ramifications and reputational damage. EasyJet and British Airways are just two firms recently accused by unions of foul, or at least unethical, play – with pilots’ union Balpa accusing easyJet of using sickness records to determine which pilots would be cut from the workforce, and BA accused by Unite of threatening a ‘fire and rehire’ policy for renegotiating contracts (both airlines deny these accusations).

So what is fair redundancy criteria and how can you make sure the right choices are made during a turbulent, emotional and reactive time? People Management asks employment law experts for guidance on some key redundancy questions.

How do I know I have a justifiable case to make redundancies?

The legal test for employers is that you have, or expect to have, a diminishing need for employees to do work of a particular kind or at a particular location, says Lucy McLynn, head of employment and partner at Bates Wells. “It is important that the diminishing need is for employees, not for the work itself,” she adds. “So if you have the same amount of work but (on cost grounds) need it to be done by fewer people, that is still a redundancy situation.”

McLynn adds that ultimately it is a business decision for an employer and not one a tribunal will interfere with lightly. James Collings, employment partner at Foot Anstey, agrees that tribunals will not typically scrutinise the business’s decision. “The employer simply has to be able to show that a reduced requirement is genuinely the reason for the dismissal of an individual,” he says.

How do I create fair redundancy selection criteria? 

One of the most common challenges to the fairness of a redundancy decision is not the underlying rationale for a role being made redundant, but the process for selecting which employee will be laid off, says Alex Watson, director at Fieldfisher. “Examples of common objective criteria include disciplinary records, skill and performance – for example, using the most recent appraisal scores or achievements against targets – or qualifications. It is up to the employer to select the appropriate criteria,” he says. 

Kirsty Rogers, employment partner at DWF, warns that while ‘last in, first out’ has historically been a popular criterion to use, this could lead to an age discrimination claim as younger workers are more likely to be selected. “Attendance records should also be used with caution because of the risk of discrimination. Pregnancy-related absence should be disregarded, and absence related to a disability should be considered carefully,” she says. “Failure to discount disability-related absence could amount to a failure to make a reasonable adjustment under the Equality Act 2010.”

Are there some potential reasons to make redundancies that may seem fair but are not allowed?

The rules on redundancy are specific and should not be used as a substitute for moving someone out of the business on grounds of capability, says Rogers. “If any employee is on long-term sickness absence, a proper capability procedure should be followed. Historically employers may have tried to use redundancy as a soft landing when redundancy is not the true reason,” she says.

The most common error tends to be around business reorganisations that do not actually meet the test for redundancy, according to Collings. “A classic example of this tends to be a scenario where an employee is engaged on part-time hours and where the employer decides the business needs that role to be undertaken full time,” says Collings. He adds that “looking to try and make the part-time role 'redundant' and offering the individual the same role on a full-time basis instead as an alternative is not a valid redundancy scenario”.

Are there any groups or individuals completely protected from redundancy?

In short: no. “There are no employees who cannot be made redundant,” says McLynn. However, if an employee is on maternity leave or shared paternity leave and their post is made redundant, then the employer must offer any alternative vacancy. McLynn also warns that employers should tread carefully if making an employee who has previously ‘blown the whistle’ redundant. “While they do not have any absolute protection from redundancy, they cannot be selected for redundancy because of their whistleblowing,” says McLynn. 

Care should also be taken when making part-time employees redundant, as Watson points out: “Employers should also be aware of additional protections for part-time employees, who are protected from being treated less favourably than full-time employees.”

How do I manage the potential reputational damage of redundancies?

Given the state of the UK economy and the ongoing pandemic, it is unlikely that carrying out redundancies at the moment will put you in the public’s bad books. But there are exceptions, according to Collings, that involve the manner in which the process is carried out. “If a process is carried out in an extremely insensitive, uncompassionate and 'roughshod' manner without proper planning and implementation, then that will likely result in considerable ill will from any individuals selected for redundancy and, most likely, significantly impact on the morale of staff who remain,” says Collings.

He adds that while there has been a considerable amount of government support available, it was never going to remove the need for redundancies as employers will be “paying out of their own pockets to maintain staff furlough under the coronavirus job retention scheme from July onwards”.

Should employers set up an appeals process if the selection criteria is fair?

"There has been much case law over whether an employer must offer a redundant employee the right to appeal against the dismissal,” says Rogers. “Not offering an appeal will not necessarily be fatal to the case; the test remains a question of overall fairness. It is good practice for employers to offer an appeal to avoid the issue being raised further down the line."

Watson says a right of appeal is an important step to establish fairness in any dismissal process, and that redundancy is no exception. “A failure to offer or permit an appeal is likely to render the dismissal unfair – even if every step taken by the employer before dismissal was flawless,” he says.

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