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Each month, CM’s sister service XpertHR Small Business provides easy-to-digest advice on key personnel legislation. This month: redundancy procedures

10th February 2011
Page 19
Page 19, 10th February 2011 — Each month, CM’s sister service XpertHR Small Business provides easy-to-digest advice on key personnel legislation. This month: redundancy procedures
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Which of the following most accurately describes the problem?

What is the correct procedure for making redundancies?

The correct procedure includes adequate consultation, the fair application of objective selection criteria in making the redundancies, and consideration of alternatives such as voluntary redundancy and suitable alternative employment for employees who would otherwise be redundant.

How is statutory redundancy pay calculated?

This is based on an employee’s age, pay and length of service. To be entitled to a statutory redundancy payment, an employee must have been continuously employed for at least two years.

A statutory redundancy payment is calculated by working backwards from the date of termination to calculate the number of complete years of continuous employment. The employee is entitled to receive: half a week’s pay for each year in which he or she was aged 21 or under; one week’s pay for each year in which he or she was aged between 22 and 40; and one and a half weeks’ pay for each year in which he or she was aged 41 or over. The maximum number of years of employment that can be taken into account is 20.

A week’s pay is the employee’s average wages before deduction of tax.

The cap on a week’s pay for statutory redundancy pay purposes is currently £400 (for dismissals on or after 1 February 2011). Is an employer required to consult with employees prior to giving notice of redundancies?

Yes, under the Trade Union and Labour Relations (Consolidation) Act 1992, when an employer is proposing to dismiss as redundant 20 or more employees within 90 days or less, the employer has to consult with the appropriate representatives of the employees.

Even where there is no duty to consult collectively, a redundancy dismissal will normally be unfair if there has been no or inadequate consultation with individuals.

What should redundancy consultation be about?

Consultation must be undertaken “with a view to reaching agreement” and must cover ways of avoiding the dismissals, reducing the numbers to be dismissed and mitigating the consequences of the dismissals. Employers should not give employees notice of dismissal prior to the conclusion of consultations as this might be taken as an indication that the consultations are a sham. They are not, however, obliged to adopt all or any of the proposals put forward by the employee representatives.

In a redundancy situation, how should an employer select which employees to make redundant? The employer should decide which employees to include in the pool from which selection will be made, and apply objective selection criteria to those in the pool.

The employer should consult with the relevant trade union or employee representatives on the selection criteria to be used. The criteria should be measurable and capable of being supported by evidence, such as disciplinary records. Assessment of the criteria should not be reliant on the subjective opinion of an individual manager.

The employer should be cautious not to choose selection criteria that could result in discrimination. For example, if absence records are used, the inclusion of disabilityrelated absence could result in a disability discrimination claim.

Is ‘last in, irst out’ still a valid redundancy selection criterion? The use of ‘last in, irst out’ (LIFO) is likely to put employees in younger age groups at a disadvantage, as they are more likely to be the employees with the least service. This would entitle those employees to make claims for indirect age discrimination.

Age discrimination is unlawful unless it can be objectively justiied, ie. the employer can show that it is a proportionate means of achieving a legitimate aim. The employer may be in a position to justify the use of LIFO if it can show that it is likely to reward loyalty, or if it is used as one of several criteria, or to determine the outcome of a selection exercise where employees have scored the same on other criteria.

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Organisations: Labour Relations, Trade Union

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