01 September 2001

Corinne Aldridge

Recent changes within the IT field have meant that employers are more frequently being faced with the task of reducing staff numbers. Changes within the law mean that it is important for an employer to be aware of its obligations and to prepare for them.

In considering what steps need to be taken, the employer has to identify the number of employees to be made redundant, as there is an obligation to collectively consult where 20 or more employees are to be made redundant within a 90-day period. Collective consultation will have a bearing on the timing of any redundancies and are in addition to the individual obligations that an employer has to its employees. So what does this involve?

Collective consultation

Where there is a need to collectively consult, the employer must do so with the recognised trade union or, in the absence of one, with elected employee representatives. If there are no elected representatives in place the employer is obliged to invite nominations from employees and arrange for elections (by secret ballot) of representatives.

The obligation consists firstly of providing the representatives with certain written information, including stating the reason for the redundancies, how many redundancies are to be made, the selection criteria adopted and also what redundancy payments are to be made.

The second obligation is to consult with a view to trying to minimise redundancies, and seeking agreement as to the redundancy process.

The consultation process must begin at least 30 days before the first dismissals take effect. In practice this is often difficult because employers in the IT field will for obvious reasons often want the employees to leave immediately after being notified about the redundancy. Unfortunately any employer who does not consult risks claims for protective awards of up to 90 days pay for each employee. Therefore, agreeing an early departure date with the representatives or putting employees on garden leave may be considered.

Additionally, where the employer intends to dismiss 20 or more employees it must notify the Secretary of State, giving similar information to that given to the employee representatives.

Individual consultation

In addition to the collective obligations, or where the numbers to be made redundant are less than 20, there are certain obligations to the employees individually. Whilst it is good practice to follow procedures, failure to do so could result in unfair dismissal claims by employees who have been employed for a year or more. Redundancy might be a fair reason for dismissal, but it is still incumbent upon employers to make sure they adopt fair procedures in making any redundancies. The elements of a fair procedure are:

  1. Individual Consultation. Even if collective consultation takes place, it is important for any employer to ensure employees can individually discuss their position, including why they were selected.
  2. Adopting fair selection criteria. In carrying out a redundancy the employer must apply fair and objective criteria in & selecting staff for redundancy. The employer should also consider inviting volunteers. Importantly, the employer must not be discriminatory by reason of sex, race or disability. In the past employers adopted 'last in, first out'. However, realistically, where the employer is dealing with a skilled workforce it will want to consider skills, qualifications and the needs of the ongoing business.
  3. Alternative positions. The employer should review whether there are any vacancies within the organisation to offer employees identified as redundant. The employer should be open-minded about allowing employees to apply for vacancies rather than reaching its own conclusions as to whether staff are suitable.

There are many legal obligations on an employer in carrying out a redundancy exercise. In ignoring them, the employer does so at his peril.

First published in MIS Magazine in September 2001.