T
HROUGHOUT the financial crisis, reducing overheads has become the focus of attention for many businesses. Staff costs account for a large portion of the outgoings for all size organisations; if redundancies are necessary the effects can be felt keenly by both the employee and the employer. The way in which redundancies are managed can be of crucial importance. A redundancy arises either when the employer no longer has work for the employee, or when the need for an employee to carry out work of a particular kind stops. An employee may be made redundant if the factory he works at closes entirely, or if the work it does changes so that the employee is no longer needed, for example if a piece of machinery or technology now carries out the part of production the employee was responsible f o r. These situations may arise in the future; redundancies can therefore be made where a company knows it has failed to win a large contract and will not require a large work force after all current work is completed. Essentially, redundancy requires the work an employee does to have ceased or diminished in some way. When employees are made redundant they
have the right not to be unfairly dismissed. This necessitates that the employer does a number of things during the redundancy process, including selecting the employee fairly, consulting with him or her, and locating an equivalent role within the organisation (if there is one) which he or she could carry out. This is not the only way employees can be dismissed – their conduct or capability can result in a dismissal for obvious reasons. Employees can also be dismissed for “some other substantial reason” (SOSR) which does not fit into the other categories. Dismissals for conduct, because of capability or for SOSR, do not require redundancy payments to be made. An employer can use the “some other substantial reason” heading to dismiss staff if a business decision has been taken which leads to a restructure within the firm, leaving certain roles superfluous. If, for instance, a level of middle management is removed and the duties of those managers are devolved to the tier below the management function is still required by the business, but it will be carried out by other employees. A change in the role from managerial to operational level is not a redundancy. The
In employment law, an employee may be made redundant if a piece of technology n ow carries out the role the employee was responsible for.
EXIT RIGHT
work hasn’t diminished – it still needs doing, just by other people. Where employees are unhappy about the
James H ow l e t t
way they were “dismissed” the employer can face an unfair dismissal claim. The great majority of cases brought to tribunal fail. But of the cases which do get to the tribunal stage, what if everyone has regarded the situation as a redundancy, a payment has been made to the employee but the case legally speaking is one of a “restructure”?
If the dismissal is found to be unfair, employers may be required to pay what amounts to a second redundancy payment of the basic award for unfair dismissal. In contrast, no redundancy payment would have been required for a “restructure” in light of a business decision. Taking into account the costs of going to tribunal and of recruiting new staff, it makes sense to be sure about how to deal with any kind of dismissal before proceeding. Employment law operates in a way which makes a role redundant rather than a person, and that can often require sound advice.
K C H Garden Square provides legal services for the general public, solicitors and organisations with teams working in Civil, Crime and Family Law. Expertise also includes Public Access, Mediation and Courts Martial. Members of the civil team also practice in property, personal injury and employment law.
Nottingham Chambers: 1 Oxford Street, Nottingham. Tel: 0115 941 885. Leicester Chambers: 96a New Walk, Leicester. Website:
www.kchgardensquare.co.uk
116 NOTTINGHAMSHIRE TODAY
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