More on Christmas Redundancies

28 11 2008

Last week I wrote about the solicitor from more northern climes (Cheshire in fact) who, on the Personnel Today website/podcast, was recommending employers hand out P45s to staff rather than Christmas cards this year, preferably as late as possible to Christmas Eve.  A small rumpus followed.  PT reports the results of a poll this week where 45% of the respondents (total number 198) “feared they would be making redundancies this Christmas”.  The report doesn’t say from which business sectors or location the respondents came nor what size they were, but it makes for gloomy reading. 

One kind reader of this blog said he liked what he read but didn’t find it very cheery.  Sorry about that.  Let me try and put a positive gloss on this.  First, it was a small sample so I’d query how representative it is of the wider economy.  Secondly, the 45% that said they would be making redundancies doesn’t necessarily translate as being “mass redundancies” a la Goldman Sachs or Citigroup -it could just mean one or two.  I am seeing quite  a few people at the moment who have been selected for redundancy where it is clear that there are “issues” on the basis for selection. 

In other words, in my opinion, many employers are using the economic downturn as a good excuse to “weed out” those people whose face doesn’t fit.  Undoubtedly this was what our friend from Cheshire had in mind, but it doesn’t make it any more acceptable as advice on “best practice”. 

As usual, if you want any advice on any of these issues please call me on 0207 464 8433 or email me at michaelscutt@dalelangley.co.uk





Redundancy and Age Discrimination

28 11 2008

Over the last few weeks I’ve been writing about the various issues surrounding redundancy procedure and selection.  A couple of weeks ago an interesting High Court case was reported which dealt with the issues arising on redundancy where selection on the grounds of age became relevant.  The case in question was Rolls-Royce v Unite, and was unusual in that the employer was seeking to argue that its own selection criteria was age discriminatory and the Union was arguing that it was not. Normally, of course, one would expect the positions to be reversed.

In this case, Rolls Royce operated a selection criteria that gave points for various factors, such as skill and expertise, achievement of targets, contribution to the business, self-motivation and, particularly relevant for these purposes, length of service. Those with fewest points overall were selected for redundancy. The effect of the length of service factor meant that workers with long service would gain more points and thus be less likely to be selected for redundancy than workers with shorter service who were more likely, therefore, to be younger.  Rolls Royce argued that this policy was indirectly discriminatory because it favoured older workers. 

The Court disagreed and held that such a policy could be justified by the employer (justification for a policy that is otherwise discriminatory being a defence under Age Discrimination legislation) on the grounds that the policy fulfilled a “business aim”, namely it was a contractual benefit rewarded employees loyalty and also that older workers would find it harder to obtain alternative employment upon redundancy.  The scheme was also found to be a means of enabling redundancies in the workforce to be handled “peaceably”. 

What does this case mean for employees and employers?  For businesses it is a double-edged sword because although on the one hand they may be relieved to know that the application if such a selection policy will not land them with claims for age discrimination, it also means that the flexibility they seek in selecting candidates for redundancy is reduced.  Remember, in this case it was Rolls Royce that sought to argue its own policy was discriminatory. The case is also good news for older employees with long service and less good for those with shorter.

 

 This article will appear in the “Docklands” and “Peninsula” newspapers week commencing 1st December.





It’s Christmas – I’m being made redundant!

20 11 2008

This, sadly, isn’t an uncommon complaint.  There are some Scrooge like employers out there who like to extend the festive spirit by handing out the P45 on Christmas Eve and they will have been encouraged in this practice by comments made in Personnel Today (a very good HR and employment law website and magazine) by an alleged “legal expert” from a law firm in Cheshire, advising employers that Christmas is the best time to make people redundant. 

He is reported as saying “I would actually recommend that people who may be a nuisance or disruptive to a business are actually told they’ve lost their job as close to Christmas as possible”.  Nice guy.  He justified this view by saying it would be good for cashflow apparently on the basis that they wouldn’t then need to  make a lump sum payment in lieu of notice (why?) hjhjand would get the unpleasantness out of the way so that everyone could start the New Year in a positive frame of mind.  Presumably his management philosophy is also of “the beatings will continue until morale improves” mindset.

His advice is, of course, complete nonsense.  If his comments have been correctly reported (always a big if) it shows a complete failure to understand the basics of employment law.  The statutory disciplinary and dismissal procedures apply to individual redundancies – although they are being repealed next April they are still in force this Christmas and any employer deciding to get rid of an employee (especially if they are “difficult” or “disruptive”) on Christmas Eve is going to have to ride roughshod over those procedures to achieve the aim of getting that employee out by the New Year.  A claim for unfair dismissal or discrimination is the likely result.  Until April 2009 an Employment Tribunal retains the power to increase an award to an employee by up to 50% where there has been a failure to follow the correct procedure (which, very briefly is: invitation to a meeting, full discussion of the need for redundancy, followed by consultation, followed by decision and right of appeal)  and I suspect that most Employment Tribunals faced with an employer that they judge to have unfairly dismissed an employee on Christmas Eve are likely to want to impose a  50% increase for failure to follow the process. 

It also seems ridiculous to me that axing staff so soon to Christmas is going to improve morale; it won’t, it will merely worry the remaining staff that they will be the next candidates for the same treatment.  I’m just glad I don’t work for him.

The correct way to deal with disruptive staff (whatever that means) is via the disciplinary procedures and by proactive management – there may be a good reason why difficult staff are being “disruptive”; perhaps the employer should investigate the underlying issues?

The only reason I can think for his comments is that he is trying to raise a storm and thus get free publicity.  I’m not going to fall into that trap, which is why I haven’t named him here. 

If you want to read more about it, go to www.personneltoday.com

There will, undoubtedly be Christmas redundancies, there always are, especially in the financial services sector.  If your job is or comes under threat and you want advice on your legal rights, give me a call on 0207 464 8433 or email me at michaelscutt@dalelangley.co.uk





What happens if my employer goes bust?

20 11 2008

What happens if your employer is insolvent? Again, in today’s climate, this is happening all too frequently. If this does happen to you, you should immediately contact your employer’s Insolvency Practitioner for information of what is to happen to the company. You ought to be given forms to make claims for redundancy payments from the HMRC, or alternatively they should advise you if the business or any part of it is to be sold. It is possible for insolvency practitioners to keep employees in employment whilst they make decisions regarding the company’s future.

 

Please contact me on 0207 464 8433 or email me at www.michaelscutt.co.uk for further advice





Redundancy – what are you worth?

20 11 2008

In times where nobody is sure whether or not their job will be safe in the future, it is useful to know what your entitlements are should the worst happen. Statutory (legal) provisions are not the most generous, and consist of an entitlement to notice pay under your contract of employment, or a week for each year full year worked (to a maximum of 12 weeks), whichever is higher. This is payable in accordance with your normal salary amount.

 

In addition, you are entitled to a statutory redundancy payment of a week’s pay per  full year worked if you are over 22 years of age and under 41; 1.5 weeks’ pay per full year worked for each year you are 41 or over (if you’re under 22 it’s half a week’s pay). There is a limit of £330 which is applied to a week’s pay however, meaning that if you earn more than this, you will lose out. Also, you only get paid for full years worked – so if you have been with your employer for two years and eleven months, you will only be entitled to receive payment based on two years pay, not three.

 

Some companies will have a contractual redundancy scheme which will apply instead of the statutory entitlements, if the entitlements under the contract are greater. It will not, however, be paid in addition to statutory entitlements. The first £30,000 of a redundancy payment may be paid tax-free, as long as, generally, it does not encompass a payment in lieu of notice, which will usually be subject to the usual deductions for tax and national insurance.

 

Other companies will have a non-contractual enhanced redundancy scheme, which they offer employees in return for signing a ‘compromise agreement’, which essentially means that the employee agrees not to sue the company for unfair dismissal or any other claim arising out of their employment, in return for this enhanced payment. These agreements are not legally binding unless a qualified person (such as a solicitor) has signed the agreement to state that they have advised the employee on it. This is to ensure that employees are aware of all their legal rights and any employment claim they may be signing away before the agreement becomes binding.  If you need an independent solicitor to advise you on a compromise agreement, give me a call:  I can usually help. 

 

 

 

Please call me on 0207 464 8433 or michaelscutt@dalelangley.co.uk

This article will appear in the “Docklands” and “Peninsula” newspapers week commencing 24th November 





Recognition indeed!

14 11 2008

I am pleased to say that Dale Langley & Co, the firm for whom I work, has been recognised in the Chambers & Partners 2009 Directory, just published.  This is a well respected “bible” of leading law firms and barristers in the UK and beyond.  The recommendation reads;

“Persuasive, realistic and with a good knowledge of the banking world,” this team is praised by City-based executives for its “common sense and diligence.” It is particularly recommended for maximising severance packages. Work also includes High Court restrictive covenant litigation, bonus disputes and discrimination cases. Dale Langleyknows all about the art of the possible” and is also “incredibly up-to-date and plain-speaking.

We’re very pleased with this because we believe we offer a personal service that puts the interests of our clients first and it is good to see that recognised. 

The link for Chambers is www.chambersandpartners.com

To contact me please leave a comment on this site, email me at michaelscutt@dalelangley.co.uk or phone me on 0207 464 8433.

Our main office is at 60 Lombard Street, London, EC3V 9EA.





Consultation on Redundancy

14 11 2008

This is becoming a hot topic again in view of the number of large scale redundancies we are now seeing – 3,000 at RBS and 10,000 at BT announced just this week.  I’m seeing more and more people with compromise agreements seeking advice on their situations, as you might expect.  However, in some cases, the employers are not consulting with their employees at all, but are simply telling them that they will be made redundant and then showing them the door.  This should not happen and can lead to employers unfairly dismissing the employees treated in this way.  If this happens to you you may be able to argue that you have been unfairly dismissed.

Different rules apply depending upon how many employees are being made redundant at any one time and whether there is a recognized Trade Union involved. If within a 90 day period more than 20 people at one “establishment” are to be dismissed, then the employer is under a statutory duty to consult with the affected employees.  At least 30 days consultation must take place before the redundancies occur and that increases to 90 days if 100 or more employees are placed at risk.

Many employers will stage the redundancies to avoid the need to consult in this way.  However, they cannot escape the need to consult at all and must follow (until repealed next April) the statutory disciplinary and dismissal procedures introduced in 2004. Failure to consult in individual cases can lead to a finding of automatically unfair dismissal against the employer and a potential increase in the compensatory award made by an Employment Tribunal (ET). If an employer fails to follow the collective consultancy provisions then an ET can make a “protective award” for failure to consult.  That can be 30 days or 90 days’ salary. 

If a Union is involved then the employer must consult with the union’s representatives.

Since the 6th April 2008, employees of businesses with more than 50 employees are entitled to request their employer to tell them about and consult with them on business issues which affect them.  The Information and Consultation of Employees Regulations 2004 stipulate that if ten percent of employees request it, the employer must set up a system of consultation and information.   If an employee makes that request and is sacked for it, it will be treated by an ET as automatically unfair dismissal.

 

Please call me on 0207 464 8433 or at michaelscutt@dalelangley.co.uk

 

 

 

This column will appear in the “Docklands” and “Peninsula” newspaper week commencing 17th November 2008.





I’m being made redundant – what do I do?

7 11 2008

Sadly this is all too common a question at the moment.  We’re seeing employees from all sorts of companies, like blue-chip Goldman Sachs to more humble businesses, whose jobs have been placed at risk of redundancy.  It’s worrying, but it doesn’t have to be the end of the world. 

What can you do to protect yourself?  Do you need legal advice and at what stage?

Firstly, when you are told your job is at risk of redundancy remember that you are entitled to know why.  Employers are under a duty to consult and to try and avoid redundancy if at all possible.  If the employer is conducting itself properly it should write to you advising you of the situation and then invite you to  a meeting to fully discuss.  You have a right to be accompanied by a work colleague or  a Union representative (if there is one) at that meeting. Use that meeting to find out the business case for the loss of your job: why is your role being axed?  Who and how will your work be performed once you have gone?  Following a case last year employers are required to consult on the business reason for making redundancies.  You should also consider what other roles are available that are appropriate for your level of experience and skill-set.

If you are not happy with the answers you receive, seek legal advice from an experienced employment law solicitor.  Do remember that in a redundancy programme it is the job that is at risk – if you think that you have been personally selected then you may have a claim for unfair dismissal or discrimination and it is best to seek legal advice sooner rather than later.  You may need to appeal the decision to put your role at risk and the time limits for doing so are usually very short.   

 In most cases you will be given a compromise agreement, which is a form of legally binding contract, where you will receive a compensation package in return for promising not to sue for unfair dismissal, breach of contract or discrimination (amongst other potential claims).  The contents of these agreements vary, but all require the recipient to obtain independent legal advice on the document and the rights they are giving up in return for the payment. 

On a redundancy, provided you have two years’ continuous employment experience with your company, you are legally entitled to receive a statutory redundancy payment (£330 p.a per complete year of service) in addition to receiving your notice.  Without the two years’ service your only entitlement is notice, unless you have a claim for unfair dismissal (one year’s service needed to be eligible to claim this) or discrimination.

The redundancy process can be very unsettling and hurtful –  feelings of rejection and sadness are common and they are often not addressed by the above process, even when there is no unfairness or discrimination present.  Many companies offer outplacement counselling as part of the package but that might not properly address your feelings.  You might find it helpful to visit some of the specialist career strategists that exist to address these issues and turn what might look like a very black day into a new dawn.

I can help you with all the above matters and I have links with career strategists who help you seize the opportunity presented to you on redundancy.  Do call me on 0207 464 8433 or email me at michaelscutt@dalelangley.co.uk if I can help further.  

 

 

This article will appear in the “Docklands” and “Peninsula” newspapers in the week commencing 10th November.





Redundancy

4 11 2008

In my newspaper and magazine articles over the last year I have often looked at the issues surrounding employing staff and the formalities that have to be respected.  One year on with the economic landscape looking much poorer, what do employers need to do if they want to reduce headcount and cut costs?  According to a report published by the CBI last month 65,000 jobs in manufacturing are likely to be lost in the next six months. What are the issues involved in making employees redundant?

 

What is redundancy? 

 

It is defined by s.139 of the Employment Rights Act 1996 which (to paraphrase) states that a person shall be deemed to have been dismissed for reason of redundancy if the dismissal is wholly or mainly due to the employer deciding to either cease or intend to cease that particular type of business or carry on that type of work either at that location or completely.

 

In other words if Acacia Biscuits Ltd decide they only need 20 people packing biscuits on the production line rather than the 30 doing it at the moment, that is capable of being a redundancy situation.  The legal issue that is most likely to arise is how the employer decides which people to select for redundancy and herein lies the biggest danger for employers.  However, if they decide instead that they are going to cease production altogether in this country and relocate to, say, Poland, with all staff in the UK being made redundant, there will not be many issues on selection arising. Furthermore, if they decide to stop making biscuits altogether and concentrate on making cakes instead, all the biscuit workers will probably be redundant.  

 

How does an employer select those to be made redundant? 

 

The employer needs to use an objective system for selecting employees for redundancy.  In my example above, the ten employees are all doing the same role and the employer will have to choose carefully in order to avoid claims from individuals that they have been unfairly selected.  “Last In First Out” was once used as a selection tool but is no longer favoured because it may give rise to claims under Age Discrimination legislation.   HR departments often draw up selection matrices that cover factors like attendance (but care is needed here as well to avoid potential difficulties under the Disability Discrimination act), targets achieved, gradings on annual appraisals and so on and award points for each factor.  The employees who score lowest (or highest as appropriate) are the ones then placed at risk of redundancy. 

 

 

Does the employer need to consult his employees?

 

In short, yes if more than 20 people are going to be made redundant at one “establishment” within a 90 day period (there is no definition of what constitutes an “establishment”, but it is commonly interpreted as meaning one place of business, although it doesn’t have to be).  In that situation at least 30 days must pass before the dismissals commence.  The purpose of consultation is to see if the need for redundancy can be avoided, probably be redeploying into another role. With whom he consults and for how long will depend on how many people are involved and whether there is a Union representing the employees.  If there is a recognised Union involved then the employer is under a duty to consult with the Union representatives.  Consultation should be a genuine two-way process and, since the case of UK Coal Mining Ltd v NUM & British Association of Colliery Management in 2007, the employer is required to consult on the business case for the redundancies to see if job losses can be avoided.  If an employer fails to consult when required to do so, an Employment Tribunal can make a “Protective Award” in favour of the employee, which can be one or three months’ salary, depending on the numbers involved.  Furthermore, the employee may also have a claim for unfair dismissal and a failure on the part of the employer to follow the statutory disciplinary and dismissal procedures laid down by the (soon to be repealed) Employment Act 2002 (Dispute Resolution) Regulations 2004 renders a dismissal automatically unfair.  

 

An employee with more than one year’s continuous employment experience can apply to an Employment Tribunal if he feels he has been unfairly dismissed.  An employee needs two years continuous employment in order to be eligible for a statutory redundancy payment (which is £330 per complete year of service at the moment for employees aged 21-41 and £495 for those above 41).  An employee dismissed for redundancy is also entitled to receive their notice pay in accordance with their contract of employment or statute.  If an employer gets the redundancy process wrong then an employee may be able to sue for unfair dismissal (maximum compensation award possible = £63,000 plus a basic award) and, depending on the circumstances, also claim that their selection for redundancy was based on discriminatory grounds, for which there is no maximum award.  Because it can be very costly to get it wrong, a prudent employer will require those people selected for redundancy to sign a compromise agreement (in return for receiving an enhanced redundancy package) waiving their right to sue for unfair dismissal.    

 

If you need further advice please call me on 0207 464 8433 or email me at michaelscutt@dalelangley.co.uk

 

 

 

 This article will appear in the December edition of “Business 2 Business Life” magazine