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.

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.

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.

I’ve been writing quite a lot recently on employees’ rights when selected for redundancy  and have covered most of the main issues on rights, selection criteria and compensation.  I thought it might be helpful to set out, on a no names basis of course, the general trends I am seeing from the clients from financial services companies coming in to the office.

1. Consultation – often  ignored.  If more than 20 people are placed at risk in one “establishment”, basically one office (although the law is not entirely clear on this point), within a 90 day period (or 100 people in a 90 day period)  then the employer must consult with the affected staff for at least one (three) months.  Some employers are not doing this or are paying one month’s salary as compensation for the failure to consult. 

2. Selection criteria – often not disclosed. Many people I am seeing have little or no idea why they have been selected and HR often won’t disclose what an individual’s score against the selection criteria is, let alone how that person scored against his/her comparators. 

3.  Compensation packages – not always as generous as in the past.  General custom and practice in the City in the past has been to pay one month per year of service by way of enhancement.  This is still happening, but is not of universal application.  We are seeing two weeks per year in some cases and, in smaller businesses, just the basic statutory entitlement (notice money plus a statutory redundancy payment of £330 p.w p.a of service). 

4. Bonuses – very few people have pro-rated bonus clauses in their contracts of employment.  In most cases employees will be on discretionary bonus schemes which stipulate that that person is in employment (and not under notice) when the bonus is paid, which is often in February/March.  Anyone whose employment is due to terminate before the bonus season commences is going to have difficulties in arguing for a payment in respect of bonus. The law is not at all supportive of employees seeking to challenge a low or non-existent bonus.  Many of the employees I am seeing at the moment seem very surprised at learning this and seem to think that they should be paid a bonus whatever – despite the fact that the banking world, not to mention the rest of the economy, is in meltdown.  It’s time to wake up to the new reality guys.

5. Options/Restricted stock Units -  Much depends on the terms of the Scheme rules.  Some schemes allow a window of time for the stock or options to be traded following termination.  In many cases the options are well under water and currently valueless. 

6.       HR/Employers’ Lawyers – quite often they are taking a very hard line on the packages offered and are refusing to negotiate, unless there is evidence of unfairness.  I have seen a number of people recently where redundancy has been cited as the reason for terminating employment but, in reality, the real reason is often different – and probably unfair.  The current climate makes it easier for employers to get rid of those employees they see as being difficult or aren’t seen as being up to standard.

It’s not possible to generalise all the time though, but we are certainly seeing more people with “issues” on redundancy at the moment than we did back in 2002/2003 the last time there were mass redundancies.  Please also remember that if you do have “issues” with your selection or the package offered the legal fees offered by the employer will probably not be sufficient to cover a solicitor to argue the case fully for you - legal fees on offer seem to be around £400 – 500 inc/exc VAT.  That is enough to give advice on the terms of the agreement and your general rights but is not sufficient to cover negotiating a better package or challenging the reason behind the termination of your employment.

Please give me a call on 0207 464 8433 or email me at michaelscutt@dalelangley.co.uk for more advice.

No related posts.

Redundancy – what's going on? originally appeared on Jobsworth by Michael Scutt on 16/12/2008.