With the economy continuing to show negligible, if any, signs of improvement, many employers, including Registered Providers, are making targeted redundancies following mergers or simply as one way of cutting costs. While redundancy is one potentially fair reason for dismissal, this route is not without risks, as explained below.
The first hurdle for any employer considering redundancies to overcome is to show that there is a genuine redundancy situation. For it to be a redundancy there must be a business or workplace closure or a diminished need for work of the particular kind that the employee carries out.
If, after examination, it is not a redundancy but an internal restructuring, for example, where certain tasks are being centralised, it could be that employers can avoid having to make any redundancy payments as, in these circumstances, employers will have to rely on 'some other substantial reason' for the dismissal to be fair.
If it is a genuine redundancy situation, the employer will then have to consider numerous other factors before confirming any redundancies in order to satisfy the legal criteria and, hopefully, reduce the risk of facing an unfair dismissal claim.
These factors include identifying the appropriate selection 'pool' of employees (taking into account any overlap between roles/skills and the degree to which any roles can be interchanged); identifying and applying selection criteria (which are objective, capable of independent verification and are not discriminatory); undertaking a period of consultation; and considering alternative vacancies.
Targeting certain employees for ‘redundancy’ could, therefore, be difficult to justify in law. For example, selecting those entitled to a lower redundancy payment (ie those with the shortest length of service) or those in higher paid jobs, could be age or sex discriminatory.
It is also important to bear in mind the risk of constructive unfair dismissal claims if morale is adversely affected by an aggressive redundancy or restructuring programme.
Employers may want to consider alternatives to redundancy, such as increasing the use of fixed term contracts, which can be useful if there is uncertainty about the level of on-going work in a particular area for the immediate future, for example, development work.
Of course, it is not impossible to lawfully make redundancies in these situations and doing so may be unavoidable in the current climate but it may not be as straightforward as it appears on the surface, with a number of considerations coming into play and alternatives that should be considered.
If an employer is planning on restructuring any departments or looking at making redundancies in circumstances similar to these, they should seek advice before commencing the process.