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?
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
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.
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.