Reports indicate that a recession is looming as the United Kingdom economy begins to shrink.
How might this affect businesses?
As costs increase across the board, many employers are likely to be adversely affected by the rapidly escalating increase of operational costs. This does not solely relate to the retail sector where sales might be affected, but generally. Employers will be considering how they can continue their business moving forward.
What action might employers take?
For many employers, salaries can be a significant overhead for the business. It is realistic to assume that some employers will be reviewing this overhead and considering whether costs savings for the business can be made. This may result in, for example, implementing salary reductions, less working hours, restructuring its workforce or making redundancies.
A common approach by an employer might be to reduce the size of the department, for example, reducing a team of three to a team of two. Even where a correct procedure has been followed, problems may still arise. It can be unrealistic to expect two employees to undertake the work of three with resultant complaints including a lack of support or training, long hours, unrealistic objectives or unclear expectations. A failure to manage such an arrangement often results in good employees leaving the business, ill health absence and claims to an employment tribunal.
Can contractual changes be made?
An employer can make changes to a contract of employment, however, it is important that it adheres to a correct process. Seeking to implement a material change unilaterally can result in breach of contract claims arising and potentially constructive unfair dismissal.
Is there a redundancy process?
An employer should ensure that it adheres to a process when seeking to make redundancies. There must also be a genuine reason for the redundancy as it is simply not a means of terminating employees for some other reason.
All affected employees should be involved in the consultation process before a decision of redundancy is communicated. It is important that employees have the opportunity to discuss the situation which has arisen and to challenge any issues that they feel might be unreasonable. The length of the consultation process will depend on the number of proposed redundancies to be made.
It would be usual for an employer to create a selection criteria whereby employees acquire a score for certain categories with the intention of those scoring the lowest, being identified as those to be made redundant. Challenges may often be made by an aggrieved employee and so it is important that the selection criteria can be objectively justified where possible.
What if an employee objects to being made redundant?
An employee should be allowed the right to appeal the decision to make them redundant which must be submitted within a specific timeframe. The timeframe should be in accordance with any internal policy or otherwise what might be deemed to be reasonable. The appeal would then be heard by someone independent of the redundancy procedure to ensure fairness and impartiality when reaching a final decision.
What action can be taken where an appeal is unsuccessful?
An employee may seek to present a claim of unfair dismissal at an employment tribunal where they are made redundant in addition to any other relevant claim, for example, discrimination. Claims will be dependent on the employee’s length of employment service. Issuing a claim is time sensitive and so it is important that employment advice is obtained as soon as possible.
There is also a requirement that employees seeking to issue a claim at an employment tribunal first appoint ACAS (Advisory Conciliation and Arbitration Service) for the purpose of early conciliation. This is a free service which can impact on the timeframe for issuing a claim. Early conciliation is an opportunity for the parties, through ACAS, to explore the possibility of resolving the problem without recourse to litigation.
Can an employer avoid a claim of unfair dismissal?
Many employers prefer to avoid a redundancy process altogether by instigating a without prejudice (commonly referred to as a protected conversation) with an employee before it is initiated. This, off the record conversation, enables an employer to submit a settlement proposal to an employee, generally on better financial terms than those where a redundancy is made. Where negotiations are successful, an employer will usually ask an employee to enter into a Settlement Agreement.
What is 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 instructs an employment adviser to review the Settlement Agreement, which may involve seeking amendments. An employer will usually make a contribution towards the legal fees incurred by the adviser in reviewing the Settlement Agreement.
If you would like to discuss any of the issues in this blog, please contact us.
