We see a lot of employees who are being made redundant.  One of the issues that comes up time and time again is why they were selected.  Unless the role is unique then, usually, a selection pool is necessary to decide how to select the unlucky people for redundancy.  The composition of that pool can cause problems, such as was the case in Capita Hartshead Ltd v Byard, an EAT case, where the selection pool comprised one individual.

Ms Byard was an actuary in a team of four.  Her workload reduced for various reasons and she was selected for redundancy and her employment terminated.  Capita argued that they could not assign other work to her because she was a “(pension) Scheme actuary” and each appointment thus had a personal element and the company ran the risk (it perceived) of upsetting clients if it moved their accounts to the Claimant. The ET didn’t accept this submission.  If they had the end result would probably have been very different.

The Claimant issued her claim at the ET for unfair dismissal and won.  The employer appealed (following the case of Taymech v Ryan [1994] EAT/663/94) on the basis that the ET was wrong to look at how the employer selected the pool and thus wrong to find that it was an unfair dismissal.

The EAT disagreed and upheld the decision.  In doing so it set out the following principles to be considered when the issue of composition of a selection pool arises;

1. Was the decision of the employer one which lay within the range of conduct of the reasonable employer? [cf: Williams v Compair Maxam Ltd [1982] IRLR 83 [18]]
2. The reasonable responses test is applicable to the selection of the pool from which redundancies are to be drawn
3. There is no legal requirement that the pool has to consist of employees doing the same or similar work.  It’s a matter primarily for the employer to determine. It would be difficult for the employee to challenge it where the employer has genuinely applied his mind to the problem
4. The ET is entitled to consider with care and scrutinise carefully the reasoning of the employer to determine if he has genuinely applied his mind to the issue of who should be in the selection pool
5. If the employer has genuinely applied his mind to that issue it will be “difficult but not impossible” for the employee to challenge it.

There’s something in this case for employers and employees alike, although on balance and despite the fact that the employee won in this case, this is a decision which will give more comfort to employers.  Yes, their decision on who should be in the selection pool can be scrutinised, but provided the employer does “genuinely apply” its mind to whom should be placed at risk and, crucially, documents its reasons for doing so, it will be a challenge for the employee to succeed.  The “reasonable responses” test is a broad one.

Employees can still challenge these decisions,  but it is probably only in cases where the employer hasn’t thought it through properly that they will succeed.

Related posts:

1. Redundancy Revisited
2. How Should Employers Select Employees for Redundancy?
3. Redundancy Selection: Now Harder for Employees to Challenge?

Redundancy – Have You Got The Right Pool? originally appeared on Jobsworth by Michael Scutt on 23/02/2012.

Choices, choices

Many employees often suspect they have been unfairly placed in the “departure lounge” when their company decides to restructure. Sometimes it is obvious there has been unfairness, or discrimination, in the process.  On other occasions it’s much harder to prove even if suspected and the recent case of Dabson v David Cover & Sons Ltd doesn’t help employees much.  On the other hand, employers will be relieved.

The main requirement for an employer seeking to make redundancies is to conduct a fair selection process.  The old mantra of “Last In First Out” can be problematic these days, so some other method needs to be found.  When a business decides to stop trading in a certain product then it may be fairly easy to say that all employees associated with that product should be made redundant, unless they can be redeployed elsewhere in the business.  Or if a unique role is being removed then the selection of the person carrying out that role is fairly clear cut.  However, what happens when you have ten people in a team and the employer decides it needs to reduce the size to five persons. How does an employer choose which employees to select?

The answer is to have a selection process using objective criteria. It’s not foolproof and how an employer scores the employee can be criticised.  For instance in De Belin v Eversheds the EAT held that it was wrong for an employer to artificially favour a woman on maternity leave in a selection when that had the effect of selecting a male colleague for redundancy.   There is still room for an employee to claim that they were unfairly scored against it.  Employees often claim that the manager scoring them either didn’t know them well enough to make a judgment or bore some grudge or were in some way biased against them. In the case of Mr Dabson, he argued that the manager who scored him did so unfairly and acted improperly in scoring him as he did. There had been a history of friction between the Claimant and the line manager.  On the facts as reported in the caser the final decision does look harsh on the employee.

However, the EAT held that the employer had acted reasonably and repeated previous law to the effect that it is only in a case where there is obvious mistake or an absence of good faith that the scores should be scrutinised.  Those will probably be exceptional circumstances and it makes it very difficult for an employee to challenge in these circumstances.  If employees want to run this type of argument they will need to gather their evidence together   as soon as they can.  Employers can’t relax completely though.  Challenges will still arise but provided an employer can justify their decision and show they have followed a fair and reasonable decision making process they should avoid an adverse finding at Tribunal, which isn’t to say that grievances won’t continue to be issued or letter of claim sent.

This decision suggests that employees don’t have things all their own way, despite what is often said.

Related posts:

1. How Should Employers Select Employees for Redundancy?
2. Redundancy – Have You Got The Right Pool?
3. Redundancy – know your rights!

Redundancy Selection: Now Harder for Employees to Challenge? originally appeared on Jobsworth by Michael Scutt on 22/06/2011.

If your employment has just ended,  not just for redundancy but for any reason, did you sign a compromise agreement? Perhaps you entered into a COT3 via ACAS to settle the dispute?

If you did there’s a good chance you will have signed up to a clause that says;

“You shall not at any time after the termination of your employment represent yourself as  being interested in or employed by or in any way connected with [name of ex-employer]”

Or something similar.  They are very common in properly drafted compromise agreements, as well as contracts of employment, and were probably first drafted to prevent any reputational damage or third party liabilities arising or being caused to the former employer by a disgruntled departee, or from claiming that they were still employed to assist a job application.

Before social network platforms developed it would probably have needed a definite act by the former employee to infringe such a clause.  However, with individuals “dipping their toes” into social media and setting up an account here or a profile there, these types of clauses can be unwittingly infringed simply by omission.

Take the obvious example: Linked In. It acts in many cases as nothing more than an online c.v (although there is far more that you can do with it). Many people, including the somewhat Luddite Mrs Jobsworth, set up a profile and then do nothing with it.  Probably in many cases they have forgotten they set the account up at all, meaning that when they do move employers the individual is potentially at risk of action from the former employer for holding themselves out as still being employed,especially if there has been any unpleasantness between the parties.

I’ve not yet had a case of this type of clause being enforced against an employee but it’s only a matter of time.  So, Jobsworth’s Helpful Hint #1 for today is check all your social networking profiles when you leave a job (for whatever reason) and update them, even if it means that your profile shows you are not working at that particular time.    That is preferable to being in breach of a compromise agreement.

Related posts:

1. 10 questions to ask if you’re made redundant
2. It's Christmas – I'm being made redundant!
3. I'm being made redundant – what do I do?

Just been made redundant? Don’t forget … originally appeared on Jobsworth by Michael Scutt on 13/04/2011.

Tomorrow I am chairing the SBK Legal and Strategic Guide to Workforce Restructuring.  It’s an all day conference with some very interesting speakers and covering a wide range of topics.  Click here for details.

There will be presentations on how to vary contracts of employment, how to adjust pensions, a review of the government’s planned employment law review, how to maintain a positive working relationship with Unions, as well as a session on “Realising redundancy savings: abiding by the rules to avoid a later backlash”.    The law on redundancy and procedure is particularly interesting to me and I will be especially looking forward to that session..

In the meantime my answer to the title question, pending tomorrow’s conference is: “with care”.  Many appeals and Unfair Dismissal claims arise from employees who claim they have been unfairly selected for redundancy.  How should employers who have identified the need to reduce headcount go about it?

Remember that roles are made redundant, not people.  If it looks like a person has been selected for redundancy not because of the role they do but because of who they are, a complaint may be sure to follow. The maximum compensatory sum that a Claimant can be awarded by an Employment Tribunal is £68,400, plus a “basic award” based on length of service and age, currently £400 per week of service. However a person who is chosen for redundancy because of a discriminatory reason, aka a “protected characteristic” under the Equality Act 2010 may be able to bring a claim that has no cap.

In cases where a whole team or desk is being closed, or a layer of management is being stripped out, it can be much harder to argue unfair selection.  It’s really only where there are, say, ten people performing a role and the employer wants to reduce that number to five, that selection processes need to be utilised to make sure the process is fair.

Selection criteria need to be as objective as possible – not always an easy task for an HR department tasked with drafting them – and must avoid any discriminatory factors.  For instance, LIFO (Last In First Out) whilst being objective may also discriminate against employees on grounds of age, because the newest people may be the youngest, although clearly not in every case.  Similarly, relying on attendance records may be unfair on disabled people if they have more time off sick. To minimise the risk of challenges disability-related absences should be factored out of the equation for redundancy selection purposes. Absence from work because of pregnancy or maternity related reasons should also be ignored, for obvious reasons.

In a sales team a good objective measurement might be the number of sales completed, but that is not always foolproof: an aggrieved employee might argue that they were given the worst accounts to maintain or they were hindered in some other way.  Having said that it can be very difficult for an employee to make such an argument stick.

Regular appraisals properly conducted also can assist in the redundancy selection process, although I have my doubts about “performance reviews”.  In many cases they just serve to de-motivate employees, but they do provide a historical record of how the employee has been working over a period of time and not just a snapshot at the point of termination.

What employers should try and avoid, if at all possible, is subjective criteria – soft skills are very hard to measure and has potential for an employee to claim that the person undertaking the assessment was either biased against them (their line manager for instance) or did not know them well enough to carry out an effective assessment (because the assessor was not their line manager).

As someone who regularly advises employees on redundancy selection issues, I would urge employers to try and be as objective as possible when making selection decisions.  Seek volunteers as well, because then there is likely to be less chance of issues over selection arising.

It’s a minefield, but one that can be negotiated with proper preparation and forethought. Remember the Scout’s old motto: Be Prepared!

I don’t give advice (legal or otherwise) through this blog, but if you need help with any of the above issues please do contact me at Dale Langley & Co at michaelscutt@dalelangley.co.uk.

Related posts:

1. Redundancy Selection: Now Harder for Employees to Challenge?
2. Redundancy – know your rights!
3. Redundancy – Have You Got The Right Pool?

How Should Employers Select Employees for Redundancy? originally appeared on Jobsworth by Michael Scutt on 22/03/2011.

Sponsored Post

At a time of economic stress, turndown, worry and cuts, the job market seems as much of a stressful place as anywhere.

Many over the last few months might have experienced the brunt of the economy’s tumble, which will have seeped into the employment market and taken its tolls on jobs, with redundancies being a frequent way of cutting company costs.

An article by The Guardian newspaper made the suggestion a few years back, that a worker might evaluate their position to see if they were liable for a redundancy. If you were underpaid, overworked, and generally quite young, then it seemed your job was fairly secure. Redundancies back then, tended to take their toll on the older, more expensive and more experienced workers.

These were suggestions made in 1999. Now, however, redundancies can be made across the board, with companies evaluating their own situation far more crudely and cynically, with a culling of both younger and older members of staff.

Faced with these situations, it’s hard to know exactly what to do, given that it can often feel like it’s you against the company. If you are being asked to leave a company, big, wholesome payout or not; if your dismissal is one that you feel is unfair, then you are within your rights to contend it. Alone, however, it’s likely that you will not be able to challenge a large corporation.  At the very least, you should expect to have been taken through appropriate measures, to have been treated to the correct protocol and procedure leading up to the redundancy itself.

Remember, the company is not always right. If you are in any way worried or concerned that you have been ushered into a position of demotion, or worse, ushered into a position of redundancy, then ensure you invest in the advice and expertise of a law firm who specialise in these sorts of matters. For employment solicitors, London based, try Thomas Mansfield, who represent workers at all levels. Disputes can get potentially get nasty, so always make certain you have the help of legal support if you proceed to an Employment Tribunal or Employment Appeal Tribunal.

Related posts:

1. Consultation on Redundancy
2. Redundancy Selection: Now Harder for Employees to Challenge?
3. Redundancy Tracker

Reflecting on a Redundancy originally appeared on Jobsworth by Michael Scutt on 15/03/2011.

How much tax should employers deduct from termination payments? HMRC have announced a change to  the way that lump sum termination payments have to be taxed by employers from this coming April.

As is well known, the first £30,000 of a compensation payment can be paid free of income tax and national insurance contributions, provided that it is paid as compensation for “loss of office” or employment. This commonly applies on redundancy, but can apply in other situations too.

Any balance above the £30,000 is taxable at the employee’s marginal rate of tax.  This is because of a long established concession contained within ss.403 – 404 of the Income Tax (Earnings and Pensions) Act 2003. Useful links from the HMRC website are here and here.

Such payments are usually made once a compromise agreement or COT3 has been entered into  and the employee’s employment has terminated.  The compensation payment won’t have been included on the P45.  It is important that the payment must not be contractually binding, otherwise the tax concession is lost.  Most commonly this will affect those employees being made redundant.

Usually, the employer will deduct basic rate tax only from the balance and then to leave the employee to account to HMRC in due course for any higher or additional rate tax that might be due.   This can, depending on when the payment to the employee is made give them several months before that tax has to be paid – usually by 31st January following the end of the relevant tax year.

In these straitened economic times, HMRC has decided to clamp down on this practice and will, from April 2011, require employers to deduct basic, higher and additional tax from such payments.  The effect of this will be that higher and additional rate  employee tax payers will receive the net sum, rather than having to hold some of the payment back to pay their tax.

It will prevent them investing the higher or additional tax element themselves until they have to account to HMRC for it and pocketing the interest gained on it during that time.  The detailed guidance for employers will be published next month.

The taxation of payments on termination can be a complicated issue and I recommend that you take expert advice from a solicitor or accountant if you have any concerns.

Please note that nothing in this blog constitutes legal advice to you and is just my understanding of the law.  I only give advice via Dale Langley & Co and please do get in contact via michaelscutt@dalelangley.co.uk if you need some.

Related posts:

1. When is an Ex-Gratia Payment a Notice Payment?
2. What lies ahead in 2010?

Termination Payments: Taxing Times Ahead for Employers originally appeared on Jobsworth by Michael Scutt on 20/01/2011.

The signs for Christmas are everywhere – cards in the shops, pubs seeking bookings for the office party and on television: Strictly Come Dancing and The Apprentice are a sure sign that we’re on the downward run to the annual festival of eating, drinking and making merry.

However, there’s another more unpleasant sign: redundancies may be on the up. At my firm we’ve seen an increase in clients coming in with compromise agreements. Every year companies like to get the dirty business over with before management and HR settle down to a slice of turkey and a mince pie. With rumours circulating about massive public-sector redundancies and the long-awaited Public Spending Review about to be announced next week, I don’t suppose this year will be much different.

If you find that your job has been placed “at risk”, what should you do?

Here are some suggestions,

1. Try and gather as much information as possible about why your job is at risk. What will happen to your job function? How    will it be carried out once you’ve left? Is it you that’s been got rid of, not the job? (if yes to the last then you may have an unfair  dismissal on your hands)

2. How many other people have also been placed at risk? If more than 20 within a 90 day period then the employer must  consult with you for at least 28 days (90 days if more than 100 people involved)

3. If you’ve been placed in a “selection pool” and scored down against others, try and find out what the selection criteria was  and how you scored against it. The process should be as objective as possible. If not claims for unfair dismissal or  discrimination may arise.

4. What transferable skills do you have? Every employer is under a duty to try and redeploy staff into other roles, rather than just taking an axe to headcount. Very often though, that is an obligation more honoured in the breach than the observance. Get on to HR and make them aware that you want to be considered for alternative work and make it clear you want to be sent details of any vacancies.

5. If you have access to legal advice via a helpline (often bundled in with your domestic insurance) then get on to them and get their view. If still in doubt, go and see an independent solicitor.

I hope Santa has something better in store for you but if not take legal advice as soon as possible.

If you need any help with any of these issues please get in contact with me on 0207 464 8433 or via michaelscutt@dalelangley.co.uk

This article does not constitute legal advice and you should not act (or fail to act) in reliance upon it.  Always take independent legal advice on your own particular situation.

Related posts:

1. More on Christmas Redundancies

Are Redundancies on the Rise? originally appeared on Jobsworth by Michael Scutt on 12/10/2010.

I’m fond of cartoons, with Alex from the Daily Telegraph being my favourite.  Banx in the FT is usually very droll as well. Steve Bell in The Guardian always used to be good but I don’t read The Grauniad anymore.

Financial Times 8th June 2010

I saw this in the FT yesterday.  Could be very topical after the Budget.

Financial Times 9th June 2010

And from today’s paper – very true indeed.

Related posts:

1. Cartoon Time
2. Employers Watch Out: It’s Office Party Time!

Cartoon Time originally appeared on Jobsworth by Michael Scutt on 09/06/2010.

Redundancy hasn’t been in the general news recently, although Eversheds, the national law firm did hit the headlines when it was successfully sued by a male employee it selected and made redundant.  He alleged that he had been the victim of sex discrimination because he was not scored as well as a female colleague, in the same selection pool, who was on maternity leave at the time. She was scored more favourably because the firm feared doing anything else would have exposed them to a claim for sex discrimination from her.  Eversheds are appealing the decision.

This is an unusual case and not just because it was a man who was claiming he had been treated less favourably than a woman.  For a claimant (employee) it is usually quite difficult to challenge the selection pool and rationale for making the cuts: it is usually easier to criticise the process used.  The Eversheds case highlights to employers that they need to be very careful how they draft and implement selection criteria.

If you need advice on any aspect of redundancy, whether you’re an employer or employee, please do get in touch with me: 0207 464 8433 or michaelscutt@dalelangley.co.uk

Related posts:

1. Redundancy Selection: Now Harder for Employees to Challenge?
2. Redundancy – Have You Got The Right Pool?
3. How Should Employers Select Employees for Redundancy?

Redundancy Revisited originally appeared on Jobsworth by Michael Scutt on 30/05/2010.

Ok, imagine the scenario.  You’re told on Friday morning at 9.35 a.m to go to the 7^th floor and meet Siobhan, your HR generalist.  Only HR live on the 7^th floor, not real people.  You go into a meeting room with her and there is Charles, your line manager or maybe Fiona, who is really quite senior in HR but not usually seen during the hours of daylight.  You’re handed a lengthy letter and told that your role is at risk of redundancy.  What do you do?

Answer: try and get as much information out of Siobhan and Charles/Fiona as you can.  What to ask?

1. What is the company doing?  Is it a restructure/rationalization/other reason.
2. Why you?  Crucial – why is your role in the organization no longer needed? 
3. What will happen to your work once you’ve gone?  Will it be divided up amongst remaining people/sent to Bangalore/no longer needed because the business is getting out of that sector?
4. Who else is at risk?  If your role is a unique one and a layer of management is being stripped out of the organisation, this is less relevant.  But, see next one down. What is the selection criteria they are using? 
5. What is the selection criteria they are using? If there are ten in your team and five are being put at risk, how has the company decided you should be placed at risk, but not Tony who sits next to you?  Selection criteria must be objective as far as possible.
6. What is your score against the criteria?
7. How did your comparators score?  Usually HR won’t give you this information because of confidentiality reasons, but you can ask to be given it on an anonymised basis.
8. How many people in your “establishment” are being placed at risk?  If more than 20 or 100 then time limits for consultation apply.  Get suspicious if HR won’t tell you.
9.  What other roles are available?  Redundancy should be the last resort.  Employers should try and exhaust all other possibilities before dismissing you.  Have they thought of pay-cuts or unpaid leave, or could they redeploy you to another part of the business, making use of your transferable skills?
10. What is the timescale for the process?  When will the decision be made?  When will we have the next meeting?

Finally, the 11^th question: where can I get some good legal advice on my rights?  Answer: here.

I can help you with all these issues, or advise you if you’ve been given a compromise agreement.  Please call me on 0207 464 8433 or at michaelscutt@dalelangley.co.uk.

Related posts:

1. Just been made redundant? Don’t forget …
2. I'm being made redundant – what do I do?
3. It's Christmas – I'm being made redundant!

10 questions to ask if you’re made redundant originally appeared on Jobsworth by Michael Scutt on 08/10/2009.