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Painful decisions I

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21st December 2006

Page 37

Page 37, 21st December 2006 — Painful decisions I

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Redundancy is inevitably painful but the process can at least be civilised if employees' legal rights are

respected. Patric Cunnane runs through the rules.

Redundant employees often feel betrayed by an employer whose business they helped nurture, and they might feel unfairly selected for dismissal. It's a time of emotional as well as financial stress so the employers must be familiar with the law on redundancy before considering a business restructure.

What is redundancy?

Under section 139 of the Employment Rights Act 1996, a worker can be dismissed for redundancy (and may be entitled to redundancy pay) if: • The employer has ceased, or intends to cease, to carry on the business for which the employee was employed, or to carry on that business in the place where the employee was employed • The requirements for employees to carry out work of a particular kind,or to carry it out where they are employed, have ceased or diminished, or are expected to cease or diminish.

This can include cases where the workforce is reorganised and there is less work: changes in conditions mean the old job is quite different from the new one; the business relocates; or the employer puts the work out to contract. The test for redundancy is whether the employer needs fewer or no workers to do a particular job.

If an employer is planning to make 20 or more employees redundant within a 90-day period there is a legal obligation to inform and consult appropriate representatives, such as the employees' trades union, even if there are volunteers to leave the company. Employers must always consult individuals who are affected.

If there are between 20 and 99 proposed job losses at one establishment consultation must begin at least 30 days before the redundancies take effect.For 100 or more planned redundancies it must begin at least 90 days beforehand.

The law does not define "establishment", so if a haulier is making 20 drivers redundant at six sites it is up to the representatives to establish that the various sites form one establishment. Some employment tribunals have supported the idea that 20 workers at various sites constitutes an establishment: others have not.

Employers should have a selection criteria, preferably agreed with a union, so charges of discrimination are less likely. 'Last in, first out' is a common practice, but might be seen as discrimination. For example, a company which had formerly employed no black workers and had recently recruited some might want to take care about selecting only this group.

Where there is a recognised union, selection criteria will often be agreed in advance. considering factors such as skills, attendance record, performance and experience. Some companies will be able to offer six alternative work to redundant employees ployees accepting an alternative job that d from their old one are entitled to a trial p of four calendar weeks (not working Iv, without forfeiting their right to redline pay. If they refuse the job without acceptir trial period they do not automatically lose redundancy pay, but a tribunal might takr account whether the refusal was reasonat The level of redundancy pay depenc the employment contract — or, if the contr silent, on the statutory minimum that cm ers must pay.That is calculated as follows: • Haifa week's pay for each year as an era, ee up to age 21 • A week's pay for each year from 22 to 41 • A week and half's pay from age 41 or ov However, the statutory scheme is cappt maximum of 090 a week.

CONTACTS DTI: 0207 215 5000; www.dti.gov.uk Acas: 08456 061600; www.acas.org.uk Labour Research Department: 020 7928 3649; www.Ird.org.uk Redundancy law — a trade unionist's gu, the Labour Research Department, £5.2; trade union members; £11.40 for others