Topic of the week: Redundancy and the alternatives

In this week's topic of the week article, Sue Nickson of Hammonds LLP looks at a number of alternatives to redundancy as a way of dealing with difficult times. 

 These include lay-offs and short-time working, and changing terms and conditions. 

 

• Topic of the week: Alternatives to redundancy Other options for cutting staffing costs, such as reducing bonuses, outsourcing and recruiting temporary staff or agency staff, are also discussed. 

   

Previous articles in this topic of the week series

Difficult times: Is redundancy the answer? Cutting labour costs through redundancies is one of the most obvious ways of reducing overheads. 

 

More from XpertHR on redundancy and related topics

XpertHR subscribers have access to a wealth of material on redundancy and related topics - ranging from worked examples on calculating statutory redundancy payments to recent case reports concerning age discrimination in relation to contractual redundancy schemes. We pick out just some of the information available on the subject. 

 

Redundancy: legal compliance

For all aspects of the law on redundancy rights, including lay-off and short-time working, see the Redundancy rights and Informing and consulting prior to redundancies sections of the XpertHR employment law manual. 

Model policies and documents Helping you to create legally compliant documentation for your organisation. 

Documents include:

• a policy on time off work for training or to look for new employment for redundant employees;
• a letter inviting employees to elect employee representatives for redundancy consultation purposes;
• a form setting out redundancy payment particulars; and
• a letter withdrawing notice of redundancy because of a change in circumstances. 

Unsure about how to calculate statutory redundancy payments? Let our statutory redundancy payments worked examples guide you through the process. 

Don't forget that the law on redundancy also develops in the courts.  Recently reported cases on redundancy include:

• UK Coal Mining Ltd v National Union of Mineworkers (Northumberland Area) and another [2008] IRLR 4 EAT, in which the Employment Appeal Tribunal (EAT) held that an employer must consult with appropriate representatives about the reasons for the proposed redundancies, rather than just the redundancies themselves; and
• Hutchins v Permacell Finesse Ltd (in administration) EAT/0350/07, in which the EAT held that the starting point for determining a protective award is 90 days' pay. 

Redundancy case reports Search across XpertHR for the latest case reports concerning redundancy. 

Frequently asked questions Find the answers to frequently asked questions on the law on redundancy - or suggest a new question if you can't find what you're looking for. 

Questions include:

• Where an employee is made redundant shortly before the annual increase in the limit of a week's pay, but is paid in lieu of notice, which limit should be used to calculate his or her redundancy payment?
• Where an employee has been given notice of redundancy, if he or she seeks to leave before the end of the notice period to take up a new job will this affect his or her statutory redundancy payment?
• Where an employee has recently changed from full-time to part-time hours how should his or her redundancy payment be calculated?

 

Redundancy and pregnancy/maternity leave

• Does an employee made redundant while on maternity leave have any special rights?
• Where a redundancy will take effect before a woman goes on maternity leave is she entitled to preferential treatment with regard to being offered suitable alternative employment?
• If a pregnant employee is made redundant before commencing maternity leave can her employer pay her statutory maternity pay in one lump sum?
• Does a period of maternity leave break continuity of service?

How to deal with pregnant employees and those on maternity leave in a redundancy situation Practical guidance from the XpertHR "how to" section. 

Case study - employee on maternity leave during redundancy process The position of an employee who is on maternity leave during a redundancy process is a complicated one. Kate Brittin of Lewis Silkin uses a case study to highlight some of the issues. 

Line manager briefing on maternity rights that apply in specific situations This briefing covers some of the challenging situations that may arise during an employee's pregnancy or maternity leave, including redundancy. 

 

Redundancy and age discrimination

Enhanced redundancy payments worked examples Don't forget that only an enhanced redundancy payments scheme that mirrors the statutory scheme with regard to age bands and multipliers will automatically be lawful. Any other enhanced redundancy payment formula will have to be objectively justified. 

A number of recent EAT cases concern age discrimination in relation to selection for redundancy and contractual redundancy payment schemes. Run this search to read more. 

 

Voluntary redundancy

Optare Group Ltd v Transport and General Workers' Union [2007] IRLR 931 EAT Remember that volunteers for redundancy are likely to be held to have been dismissed, not to have resigned. This will be particularly important in deciding whether or not the collective redundancy consultation obligations apply. 

How to manage voluntary redundancies Practical guidance on the subject. 

Policies and documents relating to voluntary redundancy Run this search to find model documents relevant to voluntary redundancy exercises. 

 

Redundancy survivors

How to manage the survivor syndrome The "survivor syndrome", which affects those members of the workforce left behind after a round of redundancies, can have damaging consequences for the employer. 

BP oils troubled waters When making redundancies, employers should be just as concerned about the needs of the staff who stay as with those who go. IRS investigates how BP managed a downsizing exercise at its Grangemouth site. 

Survivor syndrome Run this search for more information on XpertHR on redundancy survivors. 

 

Lay-off and short-time working

Many employers are unaware that the right to lay employees off, or put them on short-time working, must be included in the contract or negotiated with individual employees before such a step is taken. 

How to implement a lay-off or short-time working Lay-offs and short-time working can be used to handle temporary work shortages and adverse trading conditions without having to resort to redundancy. 

The guarantee payments section of the XpertHR employment law manual explains the law on payments where an employee is not provided with work. 

 

Changing terms and conditions

Great care is needed if you decide to change employees' terms and conditions - for example reducing hours or pay - to help ride out the economic downturn. Changing terms unilaterally is likely to lead to breach of contract, constructive dismissal and unlawful deductions from wages claims. 

See How to change the terms of existing employment contracts and How to harmonise terms and conditions following the acquisition of a business for guidance. 

Remember that dismissing employees in order to re-engage them on new terms must be treated as redundancy for the purposes of the collective consultation requirements - GMB v Man Truck & Bus UK Ltd [2000] IRLR 636 EAT.