The "credit crunch" is being felt across the country. In the City of London workers are facing unprecedented lay-offs as banks and other employers react to the slow-down by making redundancies in swathes.
Redundancies are a way of life in the City. As one employer is firing, it is not uncommon to find another one hiring, so people can often move from job to job. However, unlike past lay-off situations, few organisations are recruiting at the moment and so employees are more willing to fight for their jobs. They are equally determined to fight for compensation if they are unsuccessful.
Employers need to take care to manage the dismissal process correctly to protect against the inevitable legal claims to come. Here are some tips for getting it right.
1. Document 'fair' reason
In any dismissal, the employer must show there was a "fair" reason for it – redundancy is, of course, a fair reason. Make sure that you have evidence to prove to a tribunal that a redundancy situation really did exist, and that the employee in question's job really disappeared as a result.
2. Justify selection criteria
One of the key battlegrounds in any redundancy situation is selection. Make sure your selection criteria are capable of being objectively justified. Reasons such as being a "good team player" and "popular with clients" are too subjective to stand up in a tribunal as they are often based simply on the personal views of line managers.
3. Don't discriminate
Ensure that redundancy selection criteria are non-discriminatory – in other words, they don't make it harder for any particular groups of employees to score highly. For example, if attendance is a criterion, make sure you exclude maternity-related absence.
4. Consult employees
A fair procedure is all about consultation. Make sure you build in sufficient opportunities to consult employees in one-to-one meetings so that you can explore reasons for their selection and the possibilities for avoiding dismissals properly.
5. Build a flexible timetable
A sensible timetable is an important part of a redundancy process – but make sure you build in enough flexibility to allow employees to come back for more meetings where there are issues to discuss, or where extra information is needed. These are bound to make the process longer. Failure to allow enough time can lead to allegations that the process was a sham, and that decisions had been made in advance.
6. Gather ideas
Discuss selection not only with the employees selected for redundancy but also with their colleagues who have survived that particular round. These employees may have ideas of their own that could help reduce the need for dismissals. For example, someone not selected for redundancy may wish to take voluntary redundancy or opt for a job share – this could save someone else's job.
7. Adhere to procedures
A fundamental part of any dismissal is adherence to the statutory dispute resolution procedures. These require employers to invite employees to a meeting to discuss the proposed redundancy, allowing them to bring a colleague or trade union representative in with them. Employers must listen to employees' concerns, tell them the outcome of the meeting in writing, and allow them to appeal. If the employees do appeal, they must be invited to a new meeting with a manager not involved in the hearing. Again, employees have the right to be accompanied, and employers must confirm the outcome in writing. Failure to do so will make the dismissal automatically unfair.
8. Look at employment options
Employers are obliged to consider the availability of suitable alternative work. You should provide full details of any vacancies so that employees can evaluate the opportunity properly.
9. Air any grievances early
For many higher-paid workers the prospect of an unfair dismissal claim is not going to appeal since compensation is capped at £63,000. To claim worthwhile compensation, these employees need to include a claim for which compensation is uncapped, such as discrimination. Make sure that as part of the consultation process, all employees are given a chance to air their grievances before being selected for redundancy. If an employee does raise one of these issues, ensure you investigate fully before making the dismissal.
10. Check contracts
Likewise, there may be disputes over unpaid bonuses or future loss of bonus or stock options. Check employees' contracts, and bonus and stock option scheme rules, to see if the termination plans and timing trigger financial entitlements. Keep a grip on the timetable to make sure, for example, that employment doesn't continue longer than originally intended so that the employee is inadvertently still employed on the date a bonus is due.
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