As September introduces the start of the autumn, we find ourselves preparing for what we find is a seasonal recurrence of redundancy situations resulting in Settlement Agreements.
What is redundancy?
Redundancy is a means of terminating employment usually when an employer ceases or intends to cease continuing its business or where the requirement for an employee to carry out work of a particular kind (or particular place) has or is likely to diminish.
It should not be used as an opportunity for an employer to terminate employment for some other reason, for example, where there are performance issues.
What if an employee wants to be made redundant?
There are occasions when an employee would like to be made redundant, for example, perhaps because they were thinking of changing profession. An employee cannot insist on being made redundant and it will be for an employer to make that decision.
However, an employer can ask for employees to volunteer for redundancy. Where sufficient numbers volunteer and are accepted, this will avoid the need to invoke a redundancy procedure. An employee can find a redundancy process stressful and an employer can find it time consuming. It might, therefore, be a useful exercise to consider for the benefit of both parties and before any process is instigated.
How should an employee be selected for redundancy?
Some employers may have a redundancy policy in place which will outline what is to happen in the event of a redundancy situation. However, we find that this is often not the case. An employer must adhere to a fair and reasonable redundancy process which should involve a thorough consultation exercise with all affected employees (or a representative in a collective situation).
Where there are, for example, five employees to be made redundant in a department of ten, an employer will usually adopt a selection criteria approach which is effectively a means of scoring employees in categories considered to be important. The preparation of a selection criteria should be carefully considered so that it includes objective and measurable points and cannot be open to discriminatory factors. Those employees scoring the lowest, will be selected as being redundant. Until the conclusion of the redundancy process, an employee should only be “at risk” of redundancy.
What to do when an employee is made redundant?
A redundancy procedure should be well documented, not only to support an employer in any potential employment claim but also so that an employee fully understands what is happening at each stage of the process. For many employees, this will be the first time that they have experienced a redundancy scenario.
Where an employee has been made redundant, they should have the right to appeal the decision. In the interests of fairness and impartiality, a senior person within the organisation or an external person with sufficient experience and authority should be appointed to address any appeal. The details of appealing should be confirmed in the redundancy outcome letter, which will usually involve an employee setting out their reasons as to why decision was wrong, perhaps because of procedural errors. An employer will also generally set out the timeframe to submit the appeal.
Can an employee issue an employment claim against an employer if they are redundant?
The usual requirement is that an employee must have two years’ continuous employment in order to present a claim of unfair dismissal (in addition to any other relevant claim as at the time of issue). Where employment is of a lesser duration, an eligible employee may still pursue their employment rights in other areas, for example, breach of contract, discrimination or a protected disclosure (whistleblowing). There are strict timeframes to issue a claim and an employee considering doing so should take legal advice as soon as possible.
Why will an employer say it is a protected conversation?
During the redundancy process (more usually before it has commenced), an employer may have what they refer to as a “protected conversation” or a “without prejudice” conversation. This is usually an indication that they are proposing a financial settlement. The intention is that conversations conducted in this way should be considered as private and not relied upon at a later date should negotiations prove unsuccessful.
Where negotiations are successful, an employer will usually want to document it in a Settlement Agreement. A Settlement Agreement is a confidential document that will prevent an employee from pursuing their employment rights in return for a financial settlement. It is a requirement that an employee obtains legal advice from a recognised legal adviser and usual for an employer to make a contribution towards the associated costs.
If you would like to discuss any of the issues in this blog, please contact us.
