When a business needs to make redundancies, it can either follow the process by the book or offer employees financial incentives to sign compromise agreements waiving their claims.
As the economic climate becomes tougher, employers tend to be less inclined to offer financial incentives and keener to follow the proper legal process for individual consultation. What procedural traps should an employer avoid?
- start by telling an employee they are at risk of redundancy, not that they are redundant
- beware of calling it redundancy when it is really a dismissal on performance grounds
- if you ask the employee to stay at home during the consultation process, don't close their email account and tell clients or customers that they have left
- choose your selection pool carefully – the employee has a right to know what it is
- put together a proper matrix of criteria by which to score the "at risk" pool – the employee has a right to see their own scores
- take someone else to meetings with you to take notes (and to be a witness later if you need it)
- be satisfied that the employee's selection as redundant is not for any discriminatory reason (or any of the 15 or so reasons which would make their dismissal automatically unfair)
- consider "bumping"
- remember to consult with employees who are away from work e.g. those on maternity leave or long term sick
- keep the emails or notes that record your efforts to find suitable alternative employment and remember that women on maternity leave have priority for available jobs
- give affected employees the opportunity to apply for all vacancies not just those at a similar grade
- follow the statutory dismissal procedure as a minimum – if you don't the employee can get an extra 10-50% in compensation at the employment tribunal's discretion
- if you want to offer the employee money to "go quietly", make sure they have agreed to have that conversation with you on a "without prejudice" basis
- check that any compromise agreement you use has been reviewed very recently by legal advisers.
Additional considerations apply to collective redundancy situations.
For more information contact your usual Shepherd and Wedderburn contact or any of the Employment Group partners.
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