I know that ACAS has produced updated guidance on handling redundancies – what do I need to know about it?
Miss D. Charge
Dear Miss Charge
A new booklet containing guidance for employers, trade unions and employee representatives on how best to handle redundancies was produced when the statutory disciplinary and dismissal procedures (SDDP) was repealed back in April 2009. The SDDP was replaced by the ACAS code of practice on disciplinary procedures which Tribunals must consider when determining the procedural fairness of a dismissal, but redundancy dismissals were specifically excluded from the ACAS Code. This reflects a new approach to redundancy dismissals with less emphasis on mechanics and statutory requirements and more emphasis on flexibility and non-mandatory guidance.
Although it is not legally binding on Tribunals it is conceivable that when assessing the procedural fairness of dismissals, the closer that an employer follows the ACAS guidance the less likely a redundancy dismissal will be deemed procedurally unfair. The Employment Appeal Tribunal (EAT) has stated it is important to have regard to good employment practice when making redundancies, such as that outlined in the ACAS booklet on handling redundancies.
The ACAS guidance suggests that employers should be looking to avoid redundancies by focusing on effective HR planning to determine existing and future staffing needs. If redundancies cannot be avoided it is recommended that good employment relations are a furthered by implementing an established procedure with the involvement of employees and any trade union or employee representatives. This suggestion seems to have larger employers in mind and you may be reluctant to be restricted to a particular redundancy policy, preferring the flexibility of determining the process and redundancy benefits at the relevant time. An established redundancy policy could result in giving employees additional contractual entitlements and it also raises the expectation that employees will be consulted on other matters. The advantage, of course, is that employees undergoing a redundancy procedure under an established policy on which they have had some input may feel less anxious and uncertain.
The guidance does not introduce any new concepts and largely reflects and codifies the established case law and statute regarding redundancy procedures with some additional best practice information. It contains three sections: 1. Consultation, 2. Selection Criteria, and 3. Assistance in finding other work.
The guidance emphasises early consultation to reduce uncertainty, to enable employees to suggest alternatives to redundancy, or if redundancy is unavoidable, ways to minimise hardship.
Collective consultation is required when 20+ employees are proposed to be made redundant within a 90 day period. Failure to do so could result in a protective award of up to 90 days’ pay.
When employees are being consulted with on an individual basis, you should ensure that employees are made aware of the contents of any agreed procedure and of the opportunities available for consultation and for making representations. This is endorsed by the EAT in a very recent case where it has said that consultation should also refer to the pool for selection (in a case where the pool was one person).
The guidance suggests that the following are aspects that you should be consulting about:
- Any affect on wages as a result of an alternative job accepted instead of redundancy.
- How redundancy selection will be applied and the breadth of the redundancy pool.
- Whether redundant employees may leave during the notice period.
- Any extension of the statutory trial period in any alternative job offered.
2. Selection criteria
We all know that objective criteria, capable of being applied independently should be used when determining which employees to select as redundant. The guidance gives examples of both good and bad criteria.
- Attendance records – any attendance records relied upon should be accurate, up to date and if sickness absence is considered employers should consider whether any sickness was due to a continuous lengthy period of sickness or numerous intermittent instances. Further, any absences which relate to an employee’s disability should be disregarded.
- Experience – but beware of age issues…
- Performance – provided it is supported by some objective evidence such as pre-existing performance appraisals.
Non-compulsory criteria such as voluntary redundancy and early retirement are also suggested in the guidance.
- Requesting flexible working
- Carrying out trade union or employee representative duties
- Due to any of the protected characteristics (such as age, sex, race, sexual orientation etc) under anti-discrimination legislation
The guidance suggests establishing an internal redundancy appeals procedure to address the concerns of employees who feel that selection criteria may have been applied unfairly. However, it is questionable whether this is really required to the extent that a more senior manager over sees any appeal.
3. Assistance in finding other work
The guidance reflects the law by suggesting that employers should consider offering any suitable alternative work that might be available in either the organisation in which the employee is employed or any associated organisation.
Offering suitable alternative work
The guidance suggests that any offer of suitable alternative work should be put to the employee in writing.
The guidance re-states the law that employees under notice of redundancy have a statutory right to a four week trial period in a job with new contractual provisions. The trial period begins at the end of the notice period of the old job and ends four weeks later. The purpose is to give the employee a chance to decide on the suitability of the new job without losing the right to a redundancy payment.
Employees with at least two years’ service who are under notice of redundancy have the statutory right to a reasonable amount of time off to either look for another job or arrange training. The guidance suggests extending this right to all employees, regardless of length of service. From an employee relations point of view, this would seem to be a sensible suggestion, particularly in the event of a mass redundancy where not all employees will have more than two years’ service.
Romella Manning-Brown is an Associate at Fox Williams LLP. For more information, she can be contacted at email@example.com