The legalities of redundancies

Jul 9 2008 by Peter McCusker, The Journal

The Journal and Evening Gazette have teamed up with Weightman Associates and Dickinson Dees LLP to stage a mock employment tribunal in November. In the run up to the event James Wilders at Dickinson Dees LLP looks at what employers needs to do if they want to lay-off workers

IF the credit crunch bites, will your business be ready ? With the recent global crisis in financial markets, and some analysts predicting that by the end of the year, around 20,000 jobs will have been lost in London’s financial district alone, many businesses are preparing to ride out the economic downturn and resulting reduction in their financial performance.

If the worst does come to the worst, and redundancies become necessary, it is important that employers are up to date with developments in the law in this area, which might require a change of approach when making business decisions. It is also vital to allow sufficient time to plan, to reduce risk. When redundancies are pushed through quickly, mistakes are made, and claims relating to procedural errors in redundancy cases make up a large proportion of the employment tribunal case load. An unfairly dismissed employee is entitled to compensation of up to £64,000 on top of their redundancy and notice pay.

Always a fairly complicated affair, dealing with the redundancy process is made more difficult still by the prospect of making errors, and ending up in tribunal, where in each case it will be the job of the tribunal to identify the true cause of termination.

An example of this arose in the judgement in Optare Group Limited v TGWU. Here, more than 20 employees were to be made redundant at one establishment, which meant that it was necessary to consult with employee representatives (usually trade union officials) for at least 30 days before the first proposed dismissal. The penalty for failure to consult employee representatives is up to 90 days’ gross pay for each employee affected.

Optare, a bus manufacturer based in Leeds, proposed to make 19 redundancies at its main site and started an individual consultation process, which involved inviting applications for voluntary redundancy. Three applications were received and accepted, and a further 17 employees were made compulsorily redundant. The TGWU argued that this meant 20 employees were being dismissed as redundant, and that the collective consultation requirements applied. Optare argued that the volunteers could not be counted.

The EAT agreed with the union, stating that what needs to be considered is the cause of the termination of employment, and who began the process that led to it. Although volunteers may withdraw their application at any point, they can still be treated as having been dismissed by the employer where the only reason they volunteered was because they had been invited to do so

For more information on the procedures around redundancy or any related issues contact James Wilders at Dickinson Dees LLP on (0191) 279-9240.

The event at Hardwick Hall, Sedgefield, on Tuesday November 4, will advise on how a tribunal works and will allow delegates to question legal professionals. Places cost £150 + VAT and can be booked via Debbie Wilde on (0191) 201-6393 or debbie.wilde@ncjmedia.co.uk