Since the beginning of this year, thousands of jobs in UK retail have been lost or put at risk. A number of household names have gone into administration, with many retailers agreeing CVAs, all of which threaten jobs in the sector. Add into the mix the uncertainty surrounding Brexit - which is affecting consumer confidence and therefore spending - plus the Fourth Industrial Revolution, which could see robots replacing humans in the workplace, together with rises in wages, rates and energy costs, and we have a perfect storm for retail jobs.
Claims relating to procedural errors in redundancy cases make up a large proportion of the employment tribunal (ET) caseload. In this article, we look at 10 top tips for getting the process right.
1. Make sure you have a genuine redundancy situation
The legal definition of redundancy is that an employee's dismissal must be wholly or mainly attributable to the employer:
- ceasing or intending to cease to carry on the business for the purposes of which the employee was employed by it (ie a business closure)
- ceasing or intending to cease to carry on that business in the place where the employee was so employed (ie a workplace closure); or
- having a reduced requirement for employees to carry out work of a particular kind at the place where the employee was employed to work (ie a reduced requirement for employees).
In order to carry out a fair dismissal for redundancy, one of these reasons must apply. The employer must also follow a fair procedure.
2. Get your pool right
If you are reducing headcount and are going to have to select from a group of people who to make redundant, make sure that you get the pool right. There are no fixed rules but it is usual to include in a pool all those in one location carrying out the same function.
3. Engage in meaningful consultation
In order for dismissals to be fair, you need to carry out individual consultation. If 20 or more redundancies are proposed at one establishment within 90 days, you will have to consult collectively with trade union representatives as well. In both scenarios, consultation has to be meaningful. This means that you have to genuinely consider the views put forward by employees and their representatives. Collective consultation has to be undertaken "with a view to reaching agreement" and must include ways of avoiding the dismissals, reducing the numbers, and mitigating the consequences. Redundancy notices cannot be issued until consultation has been completed.
4. Ask for volunteers to avoid compulsory redundancies
It could be unfair dismissal to make an employee redundant if a colleague in the same pool for redundancy had volunteered. In addition, you may have a redundancy policy that states you will ask for volunteers before making compulsory redundancies. Either way, it is important to retain discretion to refuse to accept a volunteer if they have skills that you do not want to lose.
5. Use objective selection criteria
Selection criteria should be objective, capable of being verified, transparent and non-discriminatory. Examples of potentially fair criteria include performance, skills, qualifications, experience and disciplinary record.
6. Look for suitable alternative employment
You are under an obligation to consider whether there is suitable alternative employment available, either with the employer or with an associated employer (eg a group company). When considering whether an alternative role is suitable, you need to consider the employee's skills and experience, the status of the role, the place of work, job duties, pay, hours and responsibility. An employee will lose their right to a statutory redundancy payment if they unreasonably refuse a suitable alternative role. Note that employees on maternity leave and shared parental leave have additional rights regarding alternative employment in a redundancy situation.
7. Get the numbers right
You need to assess how many employees are likely to be dismissed at each establishment within a 90 day period. If it is between 20 and 99, consultation must last for at least 30 days. If it is 100 or more, the minimum consultation period is 45 days. A failure to consult collectively can lead to stiff penalties – the ET can award up to 90 days' actual pay for each affected employee.
8. Get the establishment right
The establishment is the entity or unit to which employees are assigned to carry out their duties. In litigation related to the closure of Woolworths, the European Court of Justice held that the establishment in that case was the shop where the employees worked. The issue also arises in relation to staff who are out "on the road", such as sales representatives.The identity of the establishment in any particular situation will depend on the facts.
9. File an HR1 Form
Where you are proposing to make 20 or more redundancies within 90 days at one establishment, you must notify the Government of the potential redundancies in advance by filing a Form HR1. Failing to do this is a criminal offence, which can lead to an unlimited fine.
10. Offer the right to appeal
Employees given notice of dismissal for redundancy should be offered the right to appeal against the decision.
We would always recommend taking legal advice before embarking on a redundancy programme so that you can avoid the many possible pitfalls and defend any claims that result.