JOHN SZEPIETOWSKI https://www.szepietowski.com Tue, 12 Oct 2021 13:44:18 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.3 John Szepietowski considers Business Interruption Claims and Covid-19: an update https://www.szepietowski.com/john-szepietowski-considers-business-interruption-claims-and-covid-19-an-update/ Tue, 12 Oct 2021 13:44:18 +0000 https://www.szepietowski.com/?p=1612 In January this year, we reported on the Supreme Court’s ruling in a landmark £1.2 billion legal battle over businesses ability to claim business interruption insurance, which decisively removed many of the roadblocks faced by policyholders: The Financial Conduct Authority v Arch Insurance (UK) Ltd & Ors [2020] EWHC 2448.

After the United Kingdom High Court passed its long-awaited judgment on the Financial Conduct Authority’s Business Insurance Test case in September 2020, ruling in favour of policyholders on the majority of key issues, the United Kingdom Supreme Court granted permission for the Financial Conduct Authority and a group of insurance and reinsurance companies to appeal its ruling, specifically, Arch Insurance (UK) Ltd, Argenta Syndicate Management Ltd, Hiscox Insurance Company Ltd, MS Amlin Underwriting Ltd, QBE UK Limited and Royal & Sun Alliance Insurance Plc. Zurich Insurance Plc was also a respondent to the Financial Conduct Authority’s appeal, but did not separately appeal the decision of the court.

We now look at the practical implications of the judgment and consider how future disputes may be treated as a result.

The Financial Conduct Authority v Arch Insurance (UK) Ltd & Ors

The Supreme Court addressed the issues arising on the appeals of the Financial Conduct Authority with respect to five areas:

  1. The interpretation of ‘Disease Clauses’ (i.e. those which can be triggered by the occurrence of severe acute respiratory syndrome coronavirus 2 (Covid-19), typically within a specified distance of the insured’s premises);
  2. The interpretation of ‘Prevention of Access’ clauses (i.e. those triggered by public authority intervention preventing access to, or use of, premises as a result of Covid-19);
  3. The interpretation of ‘Hybrid Clauses’ (i.e. those clauses which contain wording from both Disease and Prevention of Access Clauses);
  4. Whether the High Court was correct in its interpretation of ‘Trends Clauses’ (i.e. certain counterfactual scenarios in relation to the operation of the clauses in relevant policies which provided for loss adjustments); and
  5. The High Court’s analysis of Orient-Express Hotels Ltd v Assicurazioni Generali S.p.A.

In the Supreme Court ruling, Lord Hamblen noted that the High Courts interpretation of the aforementioned issues was ‘too narrow’. The Judge further went on to state that “An instruction given by a public authority may amount to a ‘restriction imposed’ if it carries the imminent threat of legal compulsion or is in mandatory and clear terms and indicates that compliance is required without recourse to legal powers”.

In a separate concurring judgment, Lord Briggs stated: “On the insurers’ case, the cover apparently provided for business interruption caused by the effects of a national pandemic type of notifiable disease was in reality illusory, just when it might have been supposed to have been most needed to policyholders”. Lord Briggs further went on to state: “The outcome seemed to me to be clearly contrary to the spirit and intent of the relevant provisions of the policies in issue”.

Subsequent Decisions

Whilst the Supreme Court ruling was a largely positive outcome for policyholders, not all Business Interruption policies will guarantee the insured a pay-out in the event of interruption caused by Covid-19.

In Rockcliffe Hall Ltd v Travelers Insurance Company Ltd [2021], insurers were successful in obtaining a summary judgment against a policyholder’s Business Interruption claim on the basis that the policy in question contained a ‘closed list’ of specified diseases, which did not include Covid-19.

Such a closed diseases clause, listing specific diseases was not among the clauses considered by either High Court or Supreme Court in the test case but it is likely that the decision in Rockcliffe would have been followed given the general approach to interpretation of such exhaustive clauses.

Whilst the ruling is unlikely to cause great controversy, it does provide further guidance to policyholders considering Business Interruption claims under policies that contain ‘closed list’ disease clauses.

Impact in Practice

Whilst the test case provided much sought-after clarity for the insurance industry, many Business Interruption claims still experience delays, with policyholders reporting that they are being asked to resubmit claims, despite providing the required information.

Shortly after the judgment in January, the Financial Conduct Authority issued a ‘Dear CEO’ letter, encouraging insurers to reassess and settle claims as quickly as possible and make a interim payments where possible. Reports from the Financial Conduct Authority indicate that Hiscox have been making such payments and it is hoped that this trend continues. Data published by the Financial Conduct Authority on 12 May shows that the value of the final settlements now total 433.2 million, across 13,895 claims.

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John Szepietowski asks: When is an employee not an employee? https://www.szepietowski.com/john-szepietowski-asks-when-is-an-employee-not-an-employee-when-theyre-a-worker/ Tue, 05 Oct 2021 09:49:35 +0000 https://www.szepietowski.com/?p=1607 The boundary between employee, where you work for someone else, and when you’re a worker, again, working for someone else is not clear in the law. Whereas the self-employed have a checklist of tests to fulfil before HMRC recognises them as self-employed (the issue of contractors being another story), employees/workers do not have such a specified set of criteria.

Employees

Employment is how we traditionally understand ‘working for other people’: you have an employment contract, required to work regularly, cannot send someone else to be replaced and are entitled to various pay benefits such as Statutory Sick Pay and Maternity/Paternity Pay amongst other things.

Employees have a base level of rights, such as the right to request flexible working, time off for emergencies and protection against unfair dismissal.

Workers

Workers on the other hand are less easy to define. They may still have a contract or agree to the company’s terms and conditions in some other way, including by verbal agreement, but the work may be on a ‘casual basis’ also known as zero-hour contracts.

Workers may also have a limited right to send someone else in their place to do the work (known as subcontracting) but the employer must still have some degree of control over the manner and location of where the individual works.

Workers cannot claim unfair dismissal or statutory redundancy; however, they are entitled to the national minimum wage and annual leave.

Self-employed

If you run your own business or partnership, you are likely to ‘work for yourself’ and therefore be classed as self-employed. This means you are responsible for how, when and where you work. You can set the fees your charge clients and send them invoices rather than receive a wage from anyone else.

You have some rights, such as from health and safety legislation when working on a client’s premises and protection against discrimination. However, you do not benefit from sick pay or paid holidays. You are also responsible for your own tax and National Insurance Contributions.

Why does this matter?

If you are unsure as to your employment status, this can have a knock-on effect on your rights and obligations. It can also affect whether you are able to bring a claim against you employer for misconduct or unfair dismissal.

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John Szepietowski advises why you should read your solicitor’s report on your Property https://www.szepietowski.com/john-szepietowski-advises-why-you-should-read-your-solicitors-report-on-your-property/ Fri, 24 Sep 2021 15:44:16 +0000 https://www.szepietowski.com/?p=1603 Buying a property, especially your first home, is an exciting period of time for anyone. You may have already visualised where you are going to put the TV, picked out the curtains and read up on Feng Shui. However, have you read your solicitor’s report on your Property?

Every good conveyancer will give you a ‘Report on Title’ before asking whether you want to proceed with the purchase and exchange contracts. After that point, you are obliged to continue with the sale, or lose your deposit.

This Report may be daunting and, in some cases, very long, but it is really important you read and understand it.

The Title Register

Any good report will contain a copy of the Title Register and Title Plan. The former will say who currently owns the Property (should be the Seller!) and lists restrictions on the Property, if any.

Restrictions can date all the way back to the previous century and list restrictions of all types, such as how high a fence around the Property may be, or that you cannot build a shed.

Your solicitor will tell you whether these should be of concern to you, and whether insurance may be required to protect you from any claims or issues arising as a result of the items listed on the Title Register.

The Title Plan shows you the extent of the property you are buying. This should correspond with what you think you are buying!

Searches

Local Authority

Searches will detail general information about the Property and the land on which it is situated. The Local Authority search will tell you whether the road leading up the house is public property, whether there have been any planning applications and the outcome of those, as well as wider local information such as whether a new train line is about to be built nearby (e.g. HS2) or airport expanded. Again, your solicitor will ask the seller the key questions as to whether any of these may affect you, and whether any issues have arisen during their period of ownership.

Water

The water and environmental searches will tell information such as where the nearest water pipe is, who supplies the water and sewerage services, and whether the property is at risk of subsidence. It will also tell you whether the property is on or near the green belt, conservations zones or listed buildings. Your solicitor should be able to interpret the data and consider whether and how this may affect, for example, the ease of obtaining planning permission or home insurance.

Lease

If you are buying a leasehold, the key document is the lease itself and all of its attachments. Depending on the age of the Property, the original document may be in archaic language, but the terms will still affect your tenancy. Your solicitor should provide you with an overview of your rights and obligations under the lease, but you should also read this yourself and ask them any questions. Of course, your solicitor should tell you who the landlord and/or management company is and the term left on the lease, as well as provide information on current ground rent and service charges.

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John Szepietowski presents the New Divorce Regime https://www.szepietowski.com/john-szepietowski-presents-the-new-divorce-regime/ Wed, 08 Sep 2021 14:13:43 +0000 https://www.szepietowski.com/?p=1600 The Divorce, Dissolution and Separation Act 2020, which received royal assent this year, is due to come into force on 6 April 2022.

It marks an importance change in UK Divorce law. ‘No fault’ divorce will become an option for couples who wish to separate without the blame-game.

At present, there is only one ground for divorce, ‘irretrievable breakdown of marriage’, which needs to be supported by one of the five ‘facts’: adultery, unreasonable behaviour, separation for 2 years with consent, five years without consent and desertion. These had to be stated on the applicant’s divorce petition, meaning that one party blames the other for the breakdown of the marriage.

The new law is designed to reflect the reality that sometimes couple drift apart, and that both people no longer want to continue being legally bound to the other.

Instead of the five facts, there is simply now a ‘statement’ of irretrievable breakdown. It will be no longer possible to raise allegations of adultery or bad behaviour.

There are no grounds to oppose the divorce, aside from on the limited grounds of procedural irregularity (not serving the notice correctly), jurisdiction (arguing that the divorce should be brought in another country, not England and Wales) or challenging the existence of the marriage itself.

There is also a new route of a ‘joint application’. Both parties can produce a statement and submit it to the court. A joint application can then become a sole application, if one party feels that the other is ‘dragging their heels’ or does not take an active role in the proceedings.

The new timeline is as follows:

  • Application for divorce with accompanying statement. There is then a 20-week waiting period before the applicant(s) can apply for conditional order for divorce
  • The application must be served on the other party within 28 days. In joint cases, the court will send a copy of the notice to both parties.
  • An acknowledgement of service, even in joint cases, must be returned to the court within 14 days. If the other party wishes to dispute the divorce on one of the limited grounds stated above, then must do so within 21 days of the Acknowledge of Service.
  • After the 20 week waiting period, the applicant(s) can apply for the conditional divorce order (the old ‘decree nisi’).
  • There is then a further 6 week waiting period before the conditional order can be made final (the old ‘decree absolute’).

The main purpose of the reforms is to reduce the conflict created by divorce, which should in turn alleviate stress and antagonism between not only the parties themselves but also with their children, if applicable.

The new regime may look like it makes divorce easier procedurally, as the statement of irretrievable breakdown appears to be more of a tickbox exercise and divorce can be applied for online, however you still cannot be divorced until after a year of marriage, and the waiting periods means that the whole process can take 26 weeks at the earliest.

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John Szepietowski considers Pipia v BGEO Group Lts – 20 Jan 2021. Extended disclosure to include whatsapp messages https://www.szepietowski.com/john-szepietowski-considers-pipia-v-bgeo-group-lts-20-jan-2021-extended-disclosure-to-include-whatsapp-messages/ Tue, 07 Sep 2021 11:05:32 +0000 https://www.szepietowski.com/?p=1597 The Claimant sought the disclosure of various electronic communications, including Whatsapp messages, from two individuals they claimed to be important to the case. The individuals (W1 and W2) were not current employees of the Defendant, but the Defendant did intend to call them as witnesses.

Disclosure in this case was covered by Practice Direction 51U, which allows for disclosure of documents ‘that is or was in [a party’s] control’. The Claimant argued that the Defendants had an obligation to make ‘reasonable and proportionate requests’ for those documents, even though the documents were stored on W1 and W2’s phones and their (former) work email addresses.

Questions the judge considered were:

  • Were the mobiles within control of the Defendant?
  • Was an order necessary as well as reasonable and proportionate?

W1 had three mobile phones in the period in question: one English, and two Georgian. There was no dispute that W1 had used them to communicate about the issues in dispute. The judge accepted that W1’s messages, text and Whataspp, might be significant.

The Claimant argued, inter alia, that the contract of employment between W1 and the Defendant expressly stated (clause 15.1) that upon termination of employment, W1 was required to return all documents belonging to the Defendant and destroy all confidential documentation belong to the company.

The judge held that the obligation in 15.1 was not time limited. They also held that the clause would apply to smartphones and whatsapp communication, even if it were seriously challenged that such forms of communication were not envisioned at the time of the formation of the employment contract. He compared a smartphone to a computer on the basis that they carried out similar ‘functions’. It was therefore held that W1’s phone was in control of the Defendant.

W2’s position was different. W2 did not have a contract with the Defendant, only with another company of which the Defendant was part of a group. To impose obligations to disclose would therefore be ‘third party disclosure by the back door’. The Defendant was therefore not obliged to disclose this mobile.

As for whether an order for disclosure was needed, the judge looked at several factors such as the closeness of the trial and the number of deadlines required. The judge held an order was necessary due to the nature of the issues, the immediacy of the Whataspp (and similar) messages, and that emails and other documents alone may not give the most accurate picture of the business environment of the Defendant.

Comment

‘Documents’ therefore no longer just mean written letters or emails, but also forms of instant messaging such as Whatsapp. This is significant as Whatsapp is in part popular because it is advertised as being more secure that text messages due to its encryption feature. Now, parties may be asked to disclose what they believe would always remain private messages. There are potential issues of when ‘work chats’ are also used for private messaging, as it could be difficult (and tedious) to separate the two.

The key message is that you should always be careful as to what you are discussing about work and to whom, as you never know when it may come up again

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Is veganism a religion? https://www.szepietowski.com/is-veganism-a-religion/ Fri, 03 Sep 2021 09:15:50 +0000 https://www.szepietowski.com/?p=1594 This is not as far-fetched nor as trivial as it seems. If veganism is a religion or belief, then it can benefit from protection from discrimination legislation and other measures under the Equality Act 2010.

Veganism can be broken down into subgroups, but the one of note is ‘ethical veganism’. This goes beyond just choosing quorn for dinner, but actively believing in, promoting and taking action to advance, the welfare of animals.

Under Mr J Casamitjana Costa v The League Against Cruel Sports: 3331129/2018 (Preliminary Hearing Judgment), and after the judge reading some 1,239 pages on the subject of ethical veganism and the effect on the Claimant, it was held that ethical veganism was a belief deserving of protection under equality legislation.

However this does not give a blank card to all vegans. While most vegans would likely be able to satisfy the criterion that the belief is ‘genuinely held’ (paragraph 33 of the judgement), to fall under the legislation, the belief needs to go further than that (20 – 22). It needs to be more than just a ‘viewpoint’, thereby requiring some form of dedication, and not a mere ‘irrational opinion (34). In Mr Costa’s case, his veganism affected where he works, what he eats and with whom he associates. The Claimant would not own pets, sit on leather seats and would take active steps to ‘avoid accidental crashes with insects or birds’ when using public transport (22.6) This all-encompassing aspect therefore played a key role in the judge’s decision, and most vegans would not be so fervent in their belief.

What is the impact of this ruling?

So far there has not been a flurry of alleged anti-veganism in the courts, however the ruling has wider implications for not just the vegan community. Employers will not be able to discriminate or treat vegans less favourably than non-vegans. It is difficult to see how this is an issue on day-to-day life. Employers often ask about employees’ dietary requirements before social functions and many events already cater for vegetarians and vegans of their own accord. The impact is more psychological: it has been accepted in law that veganism is more than a ‘fad’, and is capable of being fundamentally important to someone.

It also has wider implications as to how we see religion and belief. If veganism can be accepted as a belief, it paves the way of other ideologies to receive a similar treatment. There are safeguards in paces as the belief in question still has to be ‘worthy of protection in a democratic society’, but we can all still look forward to the day the Church of the Flying Spaghetti Monster has its day in the Employment Tribunals.

 

 

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John Szepietowski Discusses the Statutory right to request flexible working https://www.szepietowski.com/john-szepietowski-discusses-the-statutory-right-to-request-flexible-working/ Thu, 26 Aug 2021 15:01:25 +0000 https://www.szepietowski.com/?p=1590 During the pandemic, many firms recognised the benefits of working from home or hybrid models, with employees splitting their hours between the office and the home desk. Many employees have seen benefits in both their mental and physical health leading to productivity gains at work, and increased enthusiasm for their job.

Presently, individuals have the statutory right to request flexible working, which encompasses both flexible hours and working from home. If informal agreement cannot be reached, then employees can make a statutory application if they have worked with the same employer for the last 26 weeks.

The employee must write to the employer, and then the employer has three months in which to reach a decision (although this time limit can be extended if agreed with the employee beforehand). Agreement is significant as a successful application requires the terms and conditions of the employee’s contract to be changes.

Although employers are required to deal with requests in a ‘reasonable manner’, there is no definition as to what is ‘reasonable’, nor any requirement to formally justify their reasoning. All that is needed for a refusal is a ‘good business reason’. Employees may be able to complain to an employment tribunal, but in many cases this is not practical: bringing your employer to a tribunal is unlikely to make them view you favourably or achieve the outcome desired. Employees may only make one application for flexible working a year.

The government are currently considering making working from home the ‘default’ option, with employers only requiring staff to work from the company officer where it is ‘essential’ for them to do so. In reality, it is likely that many employees would prefer the mixed model, which enables them to work from home some days, but return to the office on others. The former time allowing for concentration and solo working with the latter enabling easier collaboration and mentoring.

Again, there are no hard and fast rules yet as to what is ‘essential’, and many workers who cannot work from home, such as teachers, nurses and police officers, are still set to miss out. However, it could mark an important shift as to how we view work and, more specifically, end the ‘presenteeism’ culture.

Another benefit may be that companies feel more confident moving outside of London. If office space and postcodes no longer define an organisation’s prestige, they may want to relocate to take advantage of cheaper rents and be able to attract staff from across the country as the workforce is not tied to geography.

Staff would also be spared from the long commute (and its expense) and again move outside of London into leafier areas, which in turn boots suburban and rural economies. It is not wonder therefore that the government may wish to encourage working from home if it means that the ‘levelling up’ agenda is forwarded.

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John Szepietowski and the Taunton Cider Company https://www.szepietowski.com/john-szepietowski-and-the-taunton-cider-company/ Wed, 25 Aug 2021 11:40:56 +0000 https://www.szepietowski.com/?p=1587 Audley Chaucer is proud to represent the world-renowned Taunton Cider Company. The Taunton Cider Company originated in 1805, where a local farmers co-operative had formed to produce cider at Norton Fitzwarren. By the early 1900’s, Reverend Cornish had started producing cider from locally produced apples and pulp at the Heathfield Rectory. In 1911, the Priest and the co-operative made the ‘Taunton Cider Company’ in Norton Fitzwarren in an effort to commercially produce their cider.

The Taunton Cider Company has recently regained stewardship of the local 34 acre Stewley Orchard, forty-six years after planting the Orchard back in 1975. The Taunton Cider Company’s products are  available nationwide or via their online shop www.tauntoncider.co.uk.

Audley Chaucer have assisted the Taunton Cider Company in many of their legal endeavours since the day of inception including the registration of the Taunton Cider trademark and ensuring the brand remains protected. Audley Chaucer have also assisted in the purchase of Stewley Orchard and helped Taunton Cider regain their heritage site. Furthermore, Audley Chaucer are proudly collaborating with Taunton Cider Company in its fundraising efforts for major future growth and expansion.

With environmentally friendly and sustainable practices at the heart of the company, it will not be long until varieties of heritage apples grown on the orchard will be returning to the press in Taunton. Taunton Cider continues to use packaging which is both widely recyclable, re-usable, and minimises waste. Their most recent work can be found here.

With over twenty varieties of apples, an estimated annual yield of three hundred tonnes of apples will be picked yearly to produce the finest cider. Jonathan Dunne a director of Taunton Cider Company expressed his passion for the orchard and first-class cider production in his statement to the Somerset County Gazette:

“The ecology of Stewley Orchard is brimming with life. Birds and insects are its natural pesticide and roe deer and rabbits, bugs and small birds all benefit from the fallen fruits, wild flowers, grasses, and ponds.

Back in the day, the orchard won Worshipful Company of Fruiterers awards for its environmental practices. Those practices will continue, the orchard will be planted with bulbs to attract bees, and plans to build 20 hives are in place to participate in the protection of the British honeybee. The bees will be welcome pollinators in the fields.

The Taunton Cider Company is passionate about supporting the local community and local economy, and what better way to show that commitment than with creating two new jobs and an apprenticeship as a result of taking on the stewardship of Stewley Orchard.”

The Taunton Cider Company anticipates opening Stewley Orchard to tourists visiting Somerset who are interested in finding out more about how natural ciders are produced, as well as opening their doors to local schools and scientists who wish to explore and study the hundreds of varying species inhabiting the orchard.

It is Taunton Cider’s goal to ensure that the orchard is self-sustainable whilst opening up new opportunities for its Somerset locals and visitors alike, and Audley Chaucer continue to support and contribute towards the company’s efforts.

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John Szepietowski considers Brocklesby [2021] TC 07970 – reasonable excuse for late filing (HMRC) https://www.szepietowski.com/john-szepietowski-considers-brocklesby-2021-tc-07970-reasonable-excuse-for-late-filing-hmrc/ Mon, 23 Aug 2021 13:30:03 +0000 https://www.szepietowski.com/?p=1583 This was a First Tier Tribunal appeal against late filing penalties on the basis of reasonable excuse. HMRC are moving towards electronic tax filing and this case highlights the difficulties some taxpayers are having, and will have, in navigating a new system.

On the facts of this case, the taxpayer’s annual income was not high, only £3,500. The Tribunal held it was reasonable that he would not need an accountant or similar agent to handle his tax affairs; he was a sole trader singer/songwriter. The taxpayer filed is 2016-2017 paper tax return almost a year later and was then issued late filing penalties: £100 initially, then daily penalties of £900, and finally a six-month penalty of £300. The taxpayer accepted the first penalty but not the latter two.

The First Tier Tribunal held the second two penalties could not stand because the taxpayer had reasonable excuse for the delays:

1) A paper return had been used because the taxpayer had struggled to file his return online. It was not reasonable that he should have been aware of the penalty implications.

The tribunal said that HMRC had failed to tell the taxpayer, when he called to request their assistance and when he raised concerns about penalties, that, by submitting a return by paper instead of online, it would make him liable to substantial penalties. The taxpayer had been given confusing and conflicting information by HMRC, and he believed that no penalties would be charged.

2) The taxpayer had submitted returns online before, but for an unknown reason he could not do so for 2016-2017. It was reasonable for him to assume, at the time he wanted to file his return, that he would have no problems submitting online and therefore that he could file on time.

Submitting a return last-minute may not be the most prudent course of action, but there is no obligation to file tax returns early.

3) When the taxpayer filed incomplete returns on paper, there were then at least 14 weeks’ worth of delays due to HMRC not returning the forms to the taxpayer efficiently.

Comment

While one could argue that the taxpayer should have had more foresight and taken greater care when it came to filing, there was no finding that he had behaved dishonestly or had deliberately not tried to file his tax return.

If anything, this case shows that HMRC must be careful to give clear and accurate advice from the outset as to how individuals can file tax returns and make them aware of the consequences of each method of filing. They should also respond to paper applications and queries with appropriate speed. There is currently no indication that HMRC are looking to retract from their aim of ‘making tax digital’, and so it is likely confusion of paper vs online filing will continue in the near future.

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John Szepietowski Considers: How do I ensure that the redundancy is fair? https://www.szepietowski.com/john-szepietowski-considers-how-do-i-ensure-that-the-redundancy-is-fair/ Thu, 19 Aug 2021 08:30:53 +0000 https://www.szepietowski.com/?p=1581 No one likes to think of themselves as being a ‘bad employer’ and the thought of an employment tribunal claim can be worrying for a business. So how can you be sure that, when times are tough and you do need to cut staff numbers, that you are being fair?

Consultation

Firstly, you should consult with each individual at risk of redundancy individually. This can be in the office itself, or via phone or video call. You must meet with them at least once, although if they have any questions or queries, you should be sure to meet them again to address those concerns.

At the consultation, you should discuss the changes you are thinking of making and why their position may be at risk. You should ask them how redundancies could be avoided, such as through training. You should also discuss the redundancy process itself and ask whether they would like to volunteer for redundancy or have time off to look for alternative employment.

Ideally, you would come to an agreement with each employee. In any event, you should consider their suggestions and comments.

If you are planning redundancies for more than 20 people, then by law you might need to conduct a ‘collective consultation’, in addition to individual consultation. You should contact any recognised trade union representative, or if there is no union, employee representatives. If the latter do not currently exist, then you must arrange for them to be elected.

The process with collective consultation is more formal, and you must state in writing:

  • why redundancies are needed
  • which jobs, and how many, are at risk
  • the selection process for redundancy
  • how you intend to calculate redundancy pay
  • details of any agency workers you are using

Selection Process

You may group similar roles together in a selection pool to make sure you are choosing employees in a fair way. You should make sure employees know the criteria against which they are being scored.

You cannot select anyone because of their protected characteristics, such as age, disability, sex or race, or whether they are on paternity/maternity leave. You cannot select someone because you fear they might engage in ‘whistle blowing’ or have or will make complaints against you or the company.

You should be careful about indirect discrimination as well. For example, if you select based on part-time workers, then this could impact on women more than men. This would be unfair as sex is a protected characteristic.

Notice period

The statutory notice period depends on how long the employee has worked for you:

  • Less than a month: no notice
  • 1 month up to 2 years: one week
  • 2 – 12 years: one week per complete year worked
  • 12 years of more: 12 weeks.

You can give more that the statutory notice period, not less.

Payment in lieu of Notice (PILON)

You may wish an employee to cease working for you straight away. In this case, it may be easier to give them one lump-sump payment, the PILON, instead of their notice period. They are however entitled to the full pay and contractual benefits of their notice period, so it is not the ‘cheaper’ option.

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