Many financial institutions are experiencing further waves of mass redundancies. Many of you are highly skilled at running these processes to mitigate the risks of an unfair dismissal claim or a protective award. We can add to your experience by sharing our sector knowledge – we all know the law but what works in practice in a redundancy scenario?
Do employers consult collectively?
In our experience, the majority do not. Statute prescribes minimum consultation periods (30 or 90 days depending upon numbers of staff going) but most employers – and increasingly employees – want one to one meetings rather than consulting with employee representatives. We can work with you to minimise the risks associated with that approach.
Do employers offer enhanced redundancy pay?
Yes, often tied to signature of a compromise agreement waiving statutory rights. The “standard” enhanced formula is one month’s actual pay per completed year of service.
Do employees leave immediately when they are put at risk of redundancy?
Many employers want staff to leave the premises immediately – for example remain at home on garden leave or accept a payment in lieu of notice.
Does the employer have the right to send an employee on garden leave? Can fair consultation be carried out on that basis? Does it matter if all claims are compromised?
Remember that a protective award (for failure to consult collectively) cannot be waived under a compromise agreement and so you need to disincentivise an employee from bringing this claim – some part of the settlement sum should be held back or made repayable.
What is the average length of redundancy consultation?
Assuming fewer than 20 employees are being made redundant, the average length of consultation is 30 days, the minimum is two weeks. Remember to build in the three stage statutory dismissal process to avoid a finding of automatically unfair dismissal. If 20 or more employees are being made redundant, remember that termination of employment (which is different from serving notice of termination) cannot take place before the expiry of the 30 or 90 days’ consultation period.
Can an employer treat employees differently – retain some and let others go now?
Yes. Some can be paid in lieu; some can work out all or part of their notice period. You may wish to retain some longer than you can contractually hold them to their notice period. We can work with you to design retention benefits. Check the profile of those going immediately and those staying – you need to be able to show they were not chosen for a discriminatory reason or that discrimination is not indirect – for example you asked the longest serving to go immediately (possibly the oldest employees and so you may be backing into an indirect age discrimination claim).