Redundancy & Business Reorganisations

Background

At first blush redundancy dismissals appear to be relatively to deal with – after all it’s usually pretty self-evident when there is a need to reduce staff numbers. Typically, a downturn in trade or a new technical innovation will result in fewer employees being needed.

Occasionally, however,  it’s not so straightforward. As a pre-cursor to making redundancies, there is a duty for the business to consider alternatives such as introducing short-time working or pay cuts. As a result, decisions have to be made whether to instigate a redundancy exercise or attempt to change employees’ terms and conditions instead. Even if most employees were agreeable to a temporary pay cut as an alternative to being made redundant, what can employers do about a minority who won’t agree?



Pools and Selection

If a decision is made to make redundancies, how straightforward is the process likely to be? Does it make commercial sense to seek voluntary redundancies by offering enhanced terms? How many locations are affected; what are the employees’ places of work (particularly if they are field-based) for identifying any pool; what areas of the business are involved and which members of staff need to be included in the pool for selection?

Defining the pool for selection can be difficult. Do any of the employees at risk have interchangeable roles with those colleagues not in the pool, and how far does one widen the pool therefore?

Thereafter, how do employers devise objective selection criteria so as to avoid unfairness, not forgetting those individuals who may be absent on maternity or sick leave?

Collective Redundancy Consultation obligations add a further dimension. In the absence of any Works Council or recognised trade union to consult with, how do organisations elect employee representatives (subject to the micro-business exemption); how should any ballot be conducted, and how long does collective consultation have to continue before employees can be given notices of termination?

Business Reorganisations

Similarly, a business reorganisation throws up all sorts of conundrums. Firstly, if employees’ duties are changing but the work is not diminishing is it a business reorganisation, or is it a redundancy situation? A business reorganisation usually involves roles being deleted and any duties being redistributed amongst other staff. Alternatively, new posts may be created requiring individuals to apply for those posts by means of a competitive interview. If a competitive interview is to be used, then what is the best way of creating a fair process.



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