Redundancy and Covid-19
ACAS, CBI and TUC have issued a joint statement to help businesses deal with the impact of possible redundancies. Their message is that employers should ‘exhaust all possible alternatives before making redundancies’. They comment that such alternatives can often emerge from effective consultation with staff, enabling employers to retain loyal skilled staff and to help avoid the costs of redundancy, employment tribunals and recruitment in due course. They have collectively seen decisions to save jobs based on more part-time working, overtime cuts, alternative roles and retraining. The statement goes on to provide guidance on getting the redundancy process right.
We have set out below five pitfalls to avoid when making redundancies.
- Not having a sound business rationale for making the redundancies – ensure that you have determined that your business case for considering redundancies/reorganisation of your workforce is sound. Due to the availability of the furlough scheme and the job support scheme and their intention of preventing employees from losing their jobs, employers will need to show that redundancies/reorganisation is still necessary despite the availability of those schemes and, in circumstances where only a proportion of the workforce are affected, why it is necessary in relation to those employees who the employer has selected.
- Insufficient planning/not determining your timetable – determine the number of employees whom it is proposed will potentially be made redundant/subject to changes to terms and conditions of employment and then plan your process and timetable. Despite the circumstances, it’s highly likely that employers will still need to collectively consult with employees where an employer is proposing to dismiss 20 or more employees in a 90 day period or less. This will mean consulting with elected employee representatives for the relevant minimum period and also providing the required notification to the Government.
- Not consulting fully with absent employees – employees who are on furlough leave, unpaid leave, unable to come to work due to being vulnerable, working from home must be consulted with as comprehensively as those working in the office. There is no excuse for not doing this, particularly with the wider-use of video calling.
- Unfair selection – when selecting employees for redundancy or appointment to alternative positions (whether by way of selection criteria or an interview process), employers need to ensure that they use criteria that is not directly or indirectly discriminatory on the grounds of any of the characteristics protected under the Equality Act 2010 (age, sex, race etc.) and that any criteria used is applied fairly. Avoid jumping to the conclusion that furloughed employees should automatically be selected for redundancy.
- Incorrect calculation of redundancy payments – specific legislation has been introduced to deal with this under the current circumstances and the position is not clear-cut, particularly where an employee has been on furlough leave.
Unfair dismissal case law round-up
In the Employment Appeal Tribunal (‘EAT’) case of K v L, it was held that it was unfair to dismiss a teacher accused of possessing a computer containing indecent child images when he wasn’t prosecuted and it was unclear who had downloaded the images. The Claimant had been charged after the police found a shared computer at his home containing indecent images but they were unable to establish who had downloaded the images.
The School took disciplinary action, basing the allegation around the teacher’s involvement in the police investigation, without referring directly to concerns over reputational damage. The Claimant denied responsibility for the images. The dismissing manager dismissed the Claimant due to an irretrievable breakdown of trust and confidence, concerned that it could not be shown that he had not downloaded the images and due to the risk of reputational damage were he to be prosecuted in the future.
The EAT held the dismissal to be unfair due to the employer not giving the employee notice of the ground upon which dismissal was sought and that it was not reasonable to dismiss the Claimant on the basis that he might have committed the offence.
In unusual circumstances, the EAT found that the employer could fairly dismiss an employee without any procedure in the case of Gallacher v Abellio Scotrail. The Claimant was a senior manager in the Respondent’s business. Her relationship with her line manager deteriorated at a critical time for the Respondent. The Claimant’s manager decided that there was no option but to dismiss her at an appraisal meeting with no procedure or right of appeal. The tribunal found the dismissal to be fair given the unusual circumstances. The EAT declined to overturn the decision.
Employers should note that the circumstances under which it would be reasonable for an employer to take such action, without following a fair process, will arise rarely.