Planning and Running a Redundancy Process - Ten Key Points to Consider

Whilst the Channel Islands have been fortunate to weather the storm of COVID comparatively well so far, we have not been immune from the economic impact suffered by other countries. Although we hope that local recovery plans and the global vaccination programme will help return our economies to pre-pandemic levels sooner rather than later, unfortunately strategic business reviews have already led to redundancies in both Islands. Implementing redundancies is always difficult, not only for those facing redundancy, but also for those tasked with implementing the redundancy process. From years of experience in advising our clients, we know that the way a redundancy is handled can make a huge difference to how employees react to the news, including increasing or decreasing the risk of an unfair dismissal claim. We are sharing this experience with you in the form of ten key points which we hope you may find useful.

Click to view article

Point 1 - Forward Planning

Once you have decided that redundancies are inevitable, make sure you plan ahead. Any forward planning should include:

  • Process: ensure you follow all aspects of your organisation’s redundancy procedure and States’ issued best practice guidelines – ERS Code of Practice on Handling Redundancy and JACS Individual & Collective Redundancy Booklet;
  • Roles: decide who will be responsible for what, including who will speak to whom, when, and what they will say;
  • Documentation: decide who will be responsible for the initial announcement, letters convening meetings, briefing scripts to provide a framework and consistency across meetings, records of meetings, follow up letters confirming what was discussed at meetings, and any notice of termination;
  • Vacancies: decide who will compile the list of suitable alternative vacancies and keep it updated.
  • Mandatory notification: Jersey law requires that you determine whether collective consultation or notification to the Minister is required, and if so, plan the process and timing. This will also impact considerations of redundancy pools and criteria.
  • Statutory payments: there is no statutory entitlement in Guernsey - in Jersey the statutory payments are reviewed annually.

Point 2 - Selection Pool

Where a business is closing down, typically all employees will be facing redundancy and there will be no need to select between them. Where the business is continuing but looking to reduce staff numbers, you will need to identify those employees who are at risk of redundancy and to select for redundancy from within that group (or ‘pool’). When identifying the pool, we recommend a two stage process: first, identify the type of work for which fewer employees are required; second, identify who does that type of work (or work that is similar to it). They will make up the selection pool.

Point 3 - Selection Criteria

Having established your selection pool, you will need to adopt objective and (as far as possible) verifiable criteria against which to select employees for redundancy. Examples included in the Code of Practice on Handling Redundancy and the Individual & Collective Redundancy Booklet include attendance records, disciplinary record and performance. Take care that the criteria you choose are fair, can be backed up with written documentation and are not potentially discriminatory. For example, using attendance records without taking account of absence due to disability might fall foul of disability discrimination legislation in Jersey and overall procedural fairness requirements in Guernsey. If you intend to give more weight to some criteria than others, this should be decided at the forward planning stage to pre-empt any suggestion that the selection process was simply window dressing.

Point 4 - Consultation

The purpose behind consultation is often misunderstood. The aim of consultation is to help ensure that affected employees understand fully the matters they are being consulted on and to allow them to express their views, with the employer then giving proper consideration to those views. When handled properly, consultation allows the business to explore alternatives to redundancy with those at risk in a genuinely collaborative way. We have in the past worked with clients who have avoided compulsory redundancies through a variety of measures ranging from offers of alternative employment, job share, and short time working through to pay cuts, bonus deferrals, early retirement and voluntary redundancy.

Point 5 - Alternative Employment and Maternity/Adoption Leave

In Guernsey, employees who are on maternity or adoption leave at the time when a redundancy process is carried out have the automatic right to be offered any suitable alternative vacancy ahead of other employees (the same right does not exist in Jersey). The aim of this right is to prevent an employee on maternity / adoption leave being put at a disadvantage compared with colleagues as opposed to giving them a form of absolute protection. The distinction is important as the statutory right might otherwise have the unintended consequence of disproportionately disadvantaging men, effectively condoning sex discrimination. To balance competing rights, those on maternity / adoption leave should be put in the selection pool in the usual way. In Guernsey, those selected from the pool for potential redundancy should be offered a suitable alternative vacancy ahead of anyone else in that pool. In Jersey, they do not have to be offered any vacancies in priority to other employees. In both Islands, care should also be taken to make sure that an employee isn’t selected for redundancy because she is pregnant / on maternity leave, or due to something arising out of her pregnancy as this could give rise to a discrimination claim or an automatically unfair dismissal. For instance if one of the selection criterion you are using is absence figures, periods of maternity leave or sickness absence due to pregnancy should not be counted.

Point 6 - Alternative Employment and Associated Employers

In both Jersey and Guernsey, for the purposes of redundancy the business of the employer proposing to make redundancies and the business or businesses of any associated employers are treated as one. This means you need to consider whether there is suitable alternative employment available in another location and / or related business which you can offer as an alternative to redundancy during the consultation process. A failure to do this is likely to render the dismissal procedurally unfair. In Jersey, where an employee unreasonably refuses suitable alternative employment, they are not entitled to a redundancy payment.

Point 7 - Bumping

“Bumping” is the expression used when an employer moves an employee from their existing role, earmarked for redundancy, into a “safe” role held by another employee. Cases on bumping typically involve senior staff members, dismissed for redundancy as part of a cost saving exercise, claiming that their employers failed to consider them for more junior roles on lower pay. Whilst the natural reaction may be to think that lower status and a reduced salary would not be an attractive alternative to a senior employee, in such circumstances you would be well advised to discuss the possibility of ‘bumping’ as part of the consultation exercise to see if there is any interest in exploring it further. A failure to do so could render the dismissal procedurally unfair.

Point 8 - Interviewing for Alternative Roles versus Applying Selection Criteria

It is quite common when a business has gone through a restructuring exercise, leading to redundancies, that an interview process will be used to select between “at risk” staff. Interviews will generally only be appropriate where the role is genuinely a new role and you want to assess an employee’s ability to do a job which they have not previously done, particularly where it is a senior role or involves a promotion. Conversely, where the job is inherently the same (a known job performed by a known employee over a period of time) the traditional process of selection pools, application of selection criteria, consultation and scoring should be applied to decide who stays and who goes.

Point 9 - Covid-19 Considerations

Consultation by camera: if you want to achieve the aim of consultation (full understanding and allowing employees to express their views) consultation via Zoom, GoTo or Microsoft Team meetings can only come in at second best. To the extent that meetings can take place safely face to face, we recommend this.
Alternatives to redundancy: where redundancies have been prompted by a downturn in work due to COVID, it will be important in any Employment Tribunal proceedings to be able to show that the business gave thought to how long the downturn was likely to last and whether it was feasible to keep employees on (adopting temporary measures) until workflow increased. Such measures might include short time working, job share, reduced pay and unpaid leave or lay off. Such temporary arrangements would have to be agreed with staff rather than imposed, but could well be more acceptable than job losses.
Vulnerable employees / family members: if an ‘at risk’ employee has been working from home as a result of the pandemic due to their medical condition or that of a family member, selection criteria should be modified as necessary to discount the impact on their redundancy score. For example, a pregnant employee whose annual objectives include participating in face to face business development meetings should not be penalised in a ‘performance’ criteria score for failing to achieve this aspect of her objectives.

Point 10 - Record Keeping

We cannot emphasise enough the importance of record keeping. In any contested redundancy case, the Employment Tribunal will want to see written records, from the initial rationale for redundancies through to the issue of any notice of dismissal on the ground of redundancy. An inability to produce written records is likely to affect the outcome of a Tribunal claim.

Sarah AshGroup Partner*T +44 (0) 1481 748
Victoria PrattSenior CounselT +44 (0)1481 748

Daniel ReadPartnerT +44 (0) 1534 700

Related Content