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How To Avoid Unfair Dismissal Claims With Redundancy

  How much?  Avoiding successful unfair dismissal claims can save you time – and a lot of money! At HR Elite, one of the most common themes of our conversations with...

 

How much?  Avoiding successful unfair dismissal claims can save you time – and a lot of money!

At HR Elite, one of the most common themes of our conversations with our clients is about risk.  That, and the potential cost of not managing that risk, in a range of different areas, including financial, reputational and the effect on the morale of the rest of the workforce.

Reading today about the Employment Tribunal case against Priti Patel, Home Secretary,  what is striking is that if the information available is to be believed, then there were plenty of opportunities to spot the risk and do something to mitigate it.  The potential cost of the maximum award for unfair dismissal (of £16, 140 basic and up to £88,519 as a compensatory award)  may well not be a deterrent at the top level of government, but to most employers, it is (and should be – they work hard for every penny!).  Add to this the potential reputational damage, this article sets out to remind you of these.

Whilst the case against Ms Patel is for constructive unfair dismissal, where the employee leaves because of the employer’s behaviour, the limits for unfair dismissal are high enough for a timely reminder at this time, when many companies are considering redundancies.  Redundancy is a dismissal, so it can be unfair – how can you protect yourself?

There are key principles to keep in mind, which the Courts will seek to establish:

Was there REALLY a redundancy situation?  In talking about a need for a genuine business reason for redundancy, this really means that the workplace may have closed, or the employer needs fewer workers (could be financial reasons or a downturn in business) or a reorganisation so that certain jobs no longer exist.  To be a fair dismissal, the reason has to be at least one of these, and there needs to be evidence – whilst the employee may well not need to see your financial projections and your bank statements, a tribunal will.   Reorganising without a justifiable business reason is highly likely to be challenged successfully – so avoid it!

Was a fair procedure applied when making decisions? 

This means:

You should tell staff as early as is reasonably practicable.  Don’t delay on this; start consultation when you know.

You should include the right people – and all of them.  Establish a redundancy ‘pool’ and make sure you consult with everyone in it, particularly where jobs overlap.  Excluding individuals or groups whose jobs were at risk may make the dismissal unfair.  Remember to include everyone – those on parental leave, off sick and on furlough all need to be consulted.

The consultation must be meaningful.  Tribunal judges are experienced and will be able to determine quite easily whether the process was genuine and if employers were really trying to find a way to avoid redundancies.  Allowing time for feedback, comment, to answer questions and seeking and listening to alternative suggestions all work well towards providing this evidence.

The process for selection must be fair and transparent.  Include ‘at risk’ staff in discussions about the selection methods and let them comment on the way in which people will be chosen.  Where there is a scoring system, you should share the score with the selected employees.  Record who does the scoring, what evidence they use for the score and make sure there is no element of discrimination in the criteria.

Was there any discrimination?

There is no upper limit where any sort of discrimination is found by a Tribunal.  NO UPPER LIMIT – so avoid it .

Your criteria must stand up to objective assessment. In particular, be careful of indirect discrimination – could criteria have a disproportionate effect on an ethnic or gender group or a disabled person?  Criteria based on flexibility in relation to working hours may adversely affect single parents and because a greater proportion of single parents are women, this may constitute indirect sex discrimination.

Watch out if you want to use sickness absence in your selection criteria – this has the potential to be discriminatory if absences includes absence for maternity related reasons, or covered by the Equality Act in the case of an employee with a disability.

‘First in, last out’ is also to be avoided, both from a business perspective (it doesn’t consider the skills the business needs going forward) and also for a potential discriminatory reason – it may  disadvantage younger employees or women, as they  are more likely to take career breaks and have less service.

Did you look for alternative work?

Always demonstrate that this has been done – although in the current climate there may be nothing available, keep an open mind until the end of the process.   The tribunal will look at whether people were told about other work and were considered for these

Did you meet with the employee?

A must.  Do this at least once – but to demonstrate everything else, twice is recommended

 

Did you give the right of appeal?  –  a redundancy is a dismissal and an employee has the right to challenge it

Final tip – Keep notes and records of everything – meetings, decisions, feedback, questions, and financial records that you rely on to make your decision.  This will all go towards providing evidence, if you need it, that you’ve done everything ‘by the book’.

This article relates to redundancy situations where fewer than 20 employees may be made redundant.   Specific rules govern consultation and process where 20 or more redundancies may be made.

Joanne Barraclough, Senior HR Consultant

For advice on redundancies of any other HR matter please contact us on 01206 700690 or e mail at info@hrelite.co.uk.