Monday, January 07, 2008

Redundancy - rules for employers

The bleak employment outlook for 2008 should prompt an urgent review of your redundancy policies. Experts are forecasting a slowdown in the economy and redundancy is likely to be an issue for many employers in 2008

 

Some of the UK’s leading organisations have already announced job cuts. Almost 3,000 workers are expected to get the axe at the BBC, and insurance company Norwich Union may lose up to 4,000 staff. Cadbury Schweppes and BP have announced redundancy plans, while the City financial institutions are expecting up to 6,500 job cuts, according to the Centre for Economics and Business Research.

"It was already clear in the summer that the jobs outlook was set to weaken next year," says Chartered Institute of Personnel and Development chief economist John Philpott. "The question now is: 'By how much?' If the slowdown is bigger than expected, it could result in a wave of job cuts and higher unemployment."

 

Any collective redundancy should be allowed adequate time and given sufficient planning to reduce claims for unfair dismissal. As a general rule, the quicker redundancies are carried out the more expensive they will end up being.

 

For a redundancy to be considered fair, it should be for a fair reason; and selection of individuals must be made on the basis of fair criteria.

Employers have a statutory duty to consult those affected by redundancy, and in the case of collective redundancies, this must be with an appropriate representative, such as a trade union representative. Where there are 20 or more employees to be dismissed within a period of 90 days, consultation must take place at least 30 days before the first dismissal. Where there are 100 or more employees, consultation must take place at least 90 days before the first dismissal.

 

Consultation usually involves discussions about ways of avoiding or reducing the number of dismissals and about mitigating the consequences of dismissals.

 

For most employers considering redundancies, it will be the first time they have dealt with age discrimination legislation, which came into force last year.

If you use the "last in, first out" method to select who should be made redundant. this approach may disadvantage younger workers who haven't yet had the chance to accrue years of service and could lead to claims of indirect age discrimination. Employers should review any redundancy packages they have previously negotiated to ensure they aren't potentially ageist in that they benefit older workers more than younger staff.

Employers are advised to follow statutory government guidelines on redundancy or wait and see what is decided by case law."

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