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38 Future of Retail


issue 01


the years, from this the following guidelines for employers can be distilled: • Give as much warning as possible about the impending redundancies.


• The basis for any selection for redundancy should be fair, non-discriminatory and clear to the employees involved.


• There should be adequate consultation with the individuals including considering how the redundancies may be avoided or their effects mitigated. Any representations should be properly considered. The consultation must be genuine and not a sham (even if it seems unlikely that another outcome can be reached).


• There should be proper consideration about whether any suitable alternative employment can be offered.


Where employees are dismissed as redundant they are entitled to statutory redundancy payment if they have been employed for two years or more. The amount of such payment is calculated by reference to age, weekly wage and length of service but is capped at a limit which increases each year in line with inflation. From 6 April 2016 the maximum payment will be £14,370. There is an added layer of complexity where


20 or more employees are being dismissed at one “establishment” within a period of 90 days or less. Recent case law involving staff who were made redundant when Woolworths went into administration has confirmed that generally, each shop is regarded as an establishment for the purposes of deciding if the 20 employee threshold is met. In such cases an employer has a separate


legal duty to consult collectively as well as individually. Employers have to consult with the appropriate representatives of the affected employees i.e. trade union or other employee representatives. Where an employer fails to comply with this


obligation the appropriate representatives can make a claim to the Employment Tribunal for a protective award for each of the affected employees. A protective award will be up to


90 days’ actual pay per employee and such a claim can therefore be very expensive for an employer. In addition there is a statutory duty to


inform the Secretary of State of the potential redundancies (on a form HR1 which is available online). The timing for this the notice is dependent upon the numbers being made redundant at each site. If there are between 20 to 99 redundancies then notification must be given 30 days before the first dismissal and if there are 100 or more redundancies at least 45 days before the first dismissal. Failure to serve this notice is a criminal offence and recently there have been high profile cases pursued against directors. It is recommended that a thorough plan is


put in place before redundancy dismissals are made. It is when processes are rushed that the legal requirements are not met. The most costly mistakes happen when employers have not planned their approach to a redundancy exercise.


AVOIDING REDUNDANCIES Before moving to dismissals employers


are expected to consider alternatives to redundancy such as restricting new recruitment, reduction or removal of overtime, not renewing contracts of self -employed contractors and reducing or ceasing the use of agency workers. Additionally employers should invite volunteers for redundancy and offer potentially redundant employees alternative vacancies elsewhere within the business. If there are employees nearing retirement age it is worth asking whether they may be interested in early retirement or reduced hours. Employees will not necessarily be redundant


if part of the business in which they work is sold. It is likely that their employment will automatically transfer to the buyer of the business under the Transfer of Undertaking (Protection of Employment) Regulations 2006. Retailers should therefore consider if sale is a viable option before implementing a redundancy programme. Restructuring may also be an option but this is likely to involve both contractual changes


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