When redundancy becomes an unfair dismissal

Redundancy is a word that is becoming all too familiar in our present economic climate as UK businesses struggle to survive the effects of the COVID-19 pandemic.

Many companies will be looking to scale down their workforce by offering redundancy if there is a reduced demand for employees, including those working in senior-level positions. Occasionally, however, an employer may call a situation redundancy when, in reality, there are no genuine business reasons for the dismissal, and it is instead an unfair means of skimming off managerial and executive positions.

It is, therefore, important that when the issue of redundancy arises, the reasons and circumstances behind this decision are thoroughly scrutinised to ensure they are genuine and not something else. If it is not fair or the process has not been followed correctly, it may give rise to a claim for unfair dismissal.

The redundancy process  

Senior executives are not necessarily the first to be considered when it comes to redundancies due to their skill, knowledge and experience; however, they are also the most expensive group of employees within a business. There are specific procedures prescribed by law that an employer must follow after notifying employees that redundancies will happen.

The consultation and selection process

Consultations between the employer and employee are the crucial first steps to take in any redundancy situation. An employer must speak with the affected employee(s) and clearly identify why they are being selected for redundancy and provide as much information as possible about why their job is at risk. This process must also offer the employee the opportunity to present any alternative proposals that might avoid the redundancy.

The selection process must be fair and objective. Whilst it can take into account matters such as disciplinary records, volunteers and length of service, it cannot identify employees on the grounds of age, sex, race, disability, or because of their status as full time or part-time employees. 

An employer must consult with any employee at risk of redundancy. If no consultation process is offered or the selection process is deemed unfair, a claim for unfair dismissal may arise.

Alternative work

During the consultation process, an employer must consider all alternatives that may avoid redundancy, such as reductions in salary, changes to duties or even restructures - whereby other employees are made redundant instead. Suitable alternative roles should be considered at this time both in the Company and any part of the Group. What is deemed suitable will depend on the remuneration offered, how similar the position is to the current job, the terms of the job offer and its location.

Due to the nature of high-powered roles, for executives and senior employees, the possibility of alternative work is going to be less likely. Therefore, if that option does not exist or the employee does not consider the alternative employment suitable, reasonable time off work must be given to allow them to seek new employment or training opportunities.

Notice period

This will be calculated according to the length of service and is determined by law. An employment contract can extend the statutory notice period or establish a prescribed period of notice, but it cannot reduce the period prescribed by statute.

During the notice period, an employee should receive their salary or be paid in lieu of notice. If payment is made in lieu of notice, the employment can be ended without notice being given. It is sometimes possible to negotiate for the notice to be spent on Garden Leave so that the employee can remain off work whilst marketing themselves to prospective employers as still being employed.

Unfair dismissal or redundancy?

If the correct procedures are not followed when redundancies are being made, or the redundancy is being offered for invalid reasons, a claim for unfair dismissal may arise. Only employees who have worked for the company for a continuous period of two years or more at the date the employment contract ends can bring a claim to the Employment Tribunal for unfair dismissal.

What should you do if you think you have been unfairly dismissed?

If unfair dismissal is suspected, an employee should attempt to negotiate with the employer with a view to being compensated for their reasonable anticipated loss of earnings. Taking a claim for unfair dismissal to the Employment Tribunal should be a last resort and only exercised when all other options have been exhausted.

There are strict time limits in the Employment Tribunal, and an application must be made to ACAS for Early Conciliation within three months of the date of dismissal (or if the case concerns discrimination, within three months of the date of the last act complained of).

Settlement agreements

If the employer offers compensation or a settlement agreement as a solution to the situation, the employer must pay for the employee to seek independent legal advice before accepting that offer. Seeking legal advice at this stage is important as a compensatory award will be given in return for the employee agreeing to waive their right to bring a claim for unfair dismissal.

We are experienced at negotiating settlements on behalf of our clients and can offer a no win no fee arrangement, so no fee will be incurred unless a successful outcome is achieved. Find out more about redundancy and settlement agreements for senior executives during COVID-19 in our article here.

Remedies for unfair dismissal

If all other options fail, a claim for unfair dismissal can be made to an Employment Tribunal. If the Tribunal is in favour of the employee, it can order reinstatement, re-engagement and/or make an order for compensation.

Reinstatement

If reinstatement is ordered, the employer must reinstate the employee into their former position and compensate them for any loss of earnings from the date of dismissal to the date of reinstatement.  This is, however, very unusual particularly with senior executives.

Re-engagement

If re-engagement is the outcome, the employer must provide the employee with comparable employment and make good of any financial losses.

Compensatory award

A compensatory award will compensate the employee for the earnings lost as a result of losing their employment. The Tribunal can reduce this award if it finds that even if fair procedures have not been followed, the employee would have been dismissed anyway or if it determines that the employee hasn't done enough to secure new employment.

Contact our Redundancy and Unfair Dismissal Lawyers in London

Whether you are an employee, executive, director or senior employee and believe your redundancy is actually unfair dismissal, contact our specialist employment lawyers on 020 7167 4800 or submit an online enquiry form for confidential and expert advice.

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