Redundancy - Not An Easy Option

We have had a number of queries on redundancies recently and did ask ourselves whether such queries were a sign of a recession – but are reluctant to voice such an opinion in case it reaches the ears of the Stock Exchange and creates panic in the City!

Redundancy is not the easy option sometimes perceived but in terms of business survival, there may be no alternative. Due to the vast nature of the topic this article will only deal with the legal considerations in the context of recent legislation.

If a business has over 150 employees, the Information and Consultation Regulations 2004 (ICE Regs) apply. If an employer has a consultation agreement in place, in line with the Regulations, they must use it when looking at redundancies.

Consultation is key to effecting fair redundancies, but it must be meaningful i.e. meetings must be held with the employees/ their representatives to discuss the reasons for the redundancies and ways in which redundancies could be avoided. Depending on the number of employees to be made redundant, there are certain statutory requirements with which to comply. If 20-99 employees are to be made redundant within a 90 day period, the consultation period must be for a minimum of 30 days; if 100 or more employees are to be made redundant the minimum period is 90 days.

The employer also has a legal requirement to provide specific information to the employees/their representatives and the Department of Trade and Industry.

If employers do not comply with the consultation requirements, the courts can make a protected award in respect of each individual affected employee which can be up to 90 days’ pay!

Even if the ICE Regulations and the statutory requirements don’t apply to the particular circumstances, an employer must still consult with the individuals concerned and comply with the Statutory Dispute Resolution Procedures which came into force in October 2004. These Procedures set out a minimum requirement to be followed when ‘contemplating’ dismissals. Each individual must:

• Receive in writing the reason why the dismissal is being contemplated
• Be invited to a meeting to discuss the matter, which must only take place once the employee has had a reasonable opportunity to consider his/her response to the information.
• After the meeting, be informed of the decision and notified of the right of appeal

One of the difficulties with these Procedures can be the length of time between first meeting with the employee and informing them of the decision to dismiss them.

So why not give notice to run concurrently with the notice period? The recent European Court of Justice decision in Irmtraud Junk –v- Wolfgang Kuhnel stated that the employer must complete a collective redundancy process before any redundancy notices are issued. (Consultation may not be deemed meaningful if employees are given notice of dismissal half way through the process!)

August 2005

We will be holding our bi-annual seminar during October 2005 on the latest changes to employment law. Our seminar will include the proposed Age Discrimination legislation together with the new Equality Regulations. If you would like to attend and do not already receive an invitation, please contact us.