In the second of her series on employment law issues, Lawyer Debbie Sadler looks at arrangements for redundancy
What is redundancy?
Redundancy is defined as the termination of employment due to:
• business closure i.e. if a GP practice closed altogether
• workplace closure i.e. where the practice ceases to operate in the location where the employee works, for example, a partnership may have multiple surgeries and choose to close one but leave another open; or
• the reduced requirement for employees to do work of a particular kind, for example where advances in IT mean that fewer clerical staff are required.
Redundancy is a potentially fair reason for dismissal but the correct procedure must be followed.
Once we have identified a potential redundancy situation, what should we do?
Much will depend on the type of redundancy and the numbers and nature of the roles affected. However, as general rule, employers need to identify the pool of employees from whom redundancies will potentially be made and pinpoint objective criteria against which the individuals will be scored. This process needs to be conducted in a consistent and objective manner. Once individuals have been identified as being at risk of redundancy, they will need to be consulted.
What is consultation?
Consultation is essentially a series of meetings (a minimum of two) to explain what changes are proposed, how and why this impacts on the individual, and what alternatives there may be to redundancy. This includes any suggestions that the employee may have for avoiding dismissal. Consultation must be genuine and effective, and allow time for any options to be explored.
It is important that employees are only placed ‘at risk’ of redundancy during this process. No final decision on their employment status must be made until the end of the consultation period. Employees should be given the opportunity to be accompanied to consultation meetings by a fellow employee or an accredited trade union official.
How long does consultation need to last and who takes part?
This depends on the number of employees at risk. Where more than 20 redundancies are contemplated over a period of 90 days or less, GPs will need to undertake collective consultation. This means they will need to meet with employee representatives who act on behalf of employees to discuss and ideally agree the above issues.
The employer must also notify the Department for Business, Innovation and Skills of the redundancy situation using a special form.
Collective consultation needs to take place over a minimum of 30 or 90 days (depending on the number of employees) and there are strict rules to be followed. Awards of up to 90 days pay per affected employee can be made for failing to comply with the regulations.
In all cases, employers need to consult with at-risk employees directly and where fewer than 20 redundancies are contemplated GPs do not need to collectively consult. In this case, there is no minimum period of consultation but employers must be able to show that a genuine consultation process has been followed.
GPs should keep documentary evidence of the procedure they have followed and the reasoning behind any decisions made. This will help in assessing the fairness of the decision-making process.
How do offers of suitable alternative employment work?
As part of the consultation process, it is important that employees at risk of redundancy are notified of alterative vacancies within the practice. Where any new role differs from a previous role, the employee will be entitled to ‘trial’ the new role for a period of four weeks to decide if it is suitable. If not, then the employee may still be entitled to a redundancy payment.
Employees who are on maternity leave during a redundancy process are given special protection and should be offered any suitable alternative role in preference to their colleagues. What is a ‘suitable alternative role’ will depend on the facts and circumstances of the case.
What redundancy payment will an employee be entitled to?
The right to a statutory redundancy payment only arises where the employee has two or more years’ continuous service. Statutory redundancy payments are based on the employee’s age, length of service (up to a maximum of 20 years) and gross weekly pay (subject to the current cap of £400.00 per week). Some employers operate enhanced redundancy payment schemes, which will be calculated in accordance with the agreed terms and conditions.
What role do compromise agreements play?
A compromise agreement is a legally binding agreement used to settle any potential claim that an employee could reasonably bring against the GP practice. There are certain legal conditions that must be met for the agreement to be valid, including a requirement that employees have independent legal advice on the terms of the agreement before it is signed. The employer would normally make a contribution towards the cost of this advice.
Although these agreements can bring peace of mind to employers, careful consideration needs to be given as to whether to offer them and when and to whom they should be offered. Treating employees differently can give rise to claims for discrimination and could also lead to suggestions that the consultation process was not carried out fairly.
Debbie Sadler is a senior employment solicitor in Blake Lapthorn’s Health and Care sector group, email@example.com.