Redundancy remains a last resort for employers. Most will still wish to explore alternatives, for example, by calling for volunteers. There is, however, a statutory duty on an employer to inform and consult appropriate representatives of any employees who may be affected about proposed redundancies involving at least 20 employees and even volunteers may count towards this number.
Employees should be consulted on the reasons why particular workers have been selected for redundancy and on the possibility of alternative work. Consultation must begin at least 90 days before the first dismissal takes effect if 100 or more redundancies are proposed at one establishment within a 90 day period, and at least 30 days in all other cases. The employer must consult on ways of avoiding the dismissals, reducing the number to be dismissed and mitigating the consequences.
Moreover, consultation must be undertaken with a view to reaching agreement with the appropriate representatives. The relevant information must be supplied in writing and cover all of the subjects laid down by statute including the proposed selection criteria to be used, how the dismissals are to be carried out (including timescale) and the proposed method of calculating any payments other than statutory redundancy ones. The information must be given in good time, ideally before consultations even begin.
Following changes made in 1999, the employer must now consult with a recognised trade union where there is one. Otherwise they have to consult with employee representatives and, where none exist, to consider electing some especially for the purpose.
Also, following the changes in 1999, the obligation to consult extends to appropriate representatives of employees whose jobs may not be at risk but who may be directly or indirectly affected by the proposed redundancies. The definition of redundancy and the calculation of statutory redundancy payments have not changed. The level of payment is still based on the length of continuous service, the age of the employee and on the employees weekly salary.
For the purpose of calculating statutory payments a weeks pay currently stands at 240 with effect from 1 February 2001. Some employers have severance arrangements which mean that employees will receive redundancy payments in excess of the statutory limits.
Where an employee has been made redundant, the first 30,000 of any payment including any statutory redundancy payment may be exempt from tax except if the employees contract of employment expressly states that the employee will be entitled to receive a sum on termination of employment. In this case the whole sum may be taxable since the sum may be viewed as a deferred payment of salary.
There are no changes to the right of employees, who have been dismissed by redundancy, to have reasonable time off with pay during working hours to look for work or to make arrangements for training.
Apart from the legal aspects, however, the approach to redundancy may be different in the future. First, many businesses now operate in a worldwide context and statutory obligations need to be considered particularly when calculating the number of employees that triggers the statutory duty to consult (overseas employees may be included), the location of those affected, and time differences which may make announcements of redundancies more difficult to manage.
Second, employers are likely to be more aware of the impact on productivity of those selected for redundancy and of the need to communicate sensitively any information both to those who are to be dismissed and to those who are to remain.
However, the implementation of redundancies will continue to be a distressing experience and the challenge for HR will be to manage the process even more sensitively than before.
janet.gaymer@haynet.com
Janet Gaymer is senior partner at Simmons & Simmons
