Advice and Wellbeing. Understand your rights if you face redundancy
Sadly, the Covid-19 pandemic has made redundancy a reality for many people in the hospitality sector. If the role you are employed in is at risk of redundancy, it’s important to understand how the process works and what your rights are.
Redundancy and dismissal.
For a dismissal to be fair it must be for a lawful reason, one of which is redundancy.
When a business stops trading, it is common that some of the workforce will be made redundant. But redundancy can also occur when there are mergers or other restructuring/reorganisation of a business.
In any case, your employer must follow the correct redundancy process.
Ensure dismissal by redundancy is fair.
Redundancies are subject to a range of requirements and failure to observe them could give rise to claims for unfair dismissal. The redundancy process should generally include:
- identifying a reasonable ‘pool for selection’ i.e. the group of employees from which the employees selected for redundancy will be chosen.
- adopting objective selection criteria and applying them fairly to the employees within this pool.
- warning and consulting employees about the potential redundancy situation.
- seeking a view from the union (if there is one).
- informing and consulting employee representatives in cases of collective redundancy.
- considering alternative employment for those employees whose roles are redundant.
- giving reasonable paid time off to look for work.
- training for future employment.
- calculation of redundancy pay.
If your employer is making individual employees redundant they must follow a fair and reasonable procedure. The following are key parts of an appropriate redundancy process:
Consider the whole pool of employees.
The whole pool of employees who are at risk of redundancy should be considered. Your employer should carefully consider the role that is targeted, rather than the person in that role, and work out which employees should be in the pool and are therefore at risk of redundancy.
Employers need to consider all those whose roles overlap or are interchangeable – i.e. assess the team unless the role affected is ‘standalone’.
For example, if the need for hotel chefs has diminished because restaurant bookings are down but room reservations are still strong, it would be wrong to include in the pool those cleaning rooms, for example. However, if there is to be a reduction in reception staff it may be a consideration to include those who do other administration-type roles.
Note: there are only very rare occasions where a role is entirely standalone. There is nearly always overlap and interdependence of roles.
There must be consultation with all those affected by redundancy dismissals. Although it is essential to consult with those who are likely to be dismissed, consultation must also include those who may not be dismissed but who may be affected by the dismissals. Generally, it will be a good idea for your employer to include all relevant staff in the consultation, even if some of the employees are not eligible for redundancy pay.
If your employer is proposing to dismiss 100 or more employees for redundancy from one establishment within 90 days or less, consultation must begin at least 45 days (previously 90 days) before the first dismissal takes place.
If your employer is proposing to dismiss between 20 and 99 employees for redundancy at one establishment within 90 days or less, consultation must begin at least 30 days before the first dismissal takes place.
If there are less than 20 employees being made redundant, the process adopted needs to be reasonable. There is no statutory guidance for what is defined as ‘reasonable’ but it would be what may be reasonable taking account of all the circumstances such as the size of the business and the reason for the redundancies.
Consultation must be an open and clear dialogue between you and your employer so you can properly be heard and the employer takes fully into consideration the issues, ideas and suggestions of all employees. The purpose of the consultation is to avoid redundancies or mitigate the impact of them.
Alternative sources of employment.
Alternative employment must be considered by both parties during the course of consultation. Your employer should not assume that you may not be prepared to take a different job at a reduced salary if you are faced with the prospect of redundancy. It’s usually safest to make all employees who are at risk aware of all vacancies.
If an alternative role falls within the definition of ‘suitable alternative employment’ it must be offered to you. If there are more candidates than roles available, there should be criteria used for selection of those most suitable. Whether a role is defined as ‘suitable alternative employment’ depends on:
- how similar the work is to your current job.
- the terms of the job being offered.
- the skills, abilities and circumstances in relation to the job.
- the pay (including benefits), status, hours and location.
Refusing an offer.
You will lose your right to statutory redundancy pay if you unreasonably turn down suitable alternative employment. You can make a claim to an employment tribunal where you do not believe the alternative role is within the definition of ‘suitable alternative employment’ or indeed there is a ‘suitable alternative role’ which is not offered when you are the only candidate.
You have the right to a four-week trial period for any other employment offered i.e. any other employment which is different to your current employment and does not qualify as suitable alternative employment as defined above.
The four-week period could be extended if training is needed. Any extension must be agreed in writing before the trial period starts.
However, if the alternative employment isn’t suitable, you should notify your employer within the four-week period. This won’t affect your employment rights, including the right to statutory redundancy pay. Failure to notify will mean your right to statutory redundancy pay is lost.
When selecting people for redundancy dismissal, employers must establish objective criteria upon the basis of which selection will be made. This is to ensure all employees are on a level playing field. The criteria should be included in the consultation and may be changed as a result of consultation with the employees.
The criteria must then be applied reasonably and objectively, preferably by people who are distanced from those affected, in order to ensure that personalities and subjective opinions do not influence the decision. If all these principles are objectively, reasonably and robustly applied, the results are likely to be fair.
Where these principles for selection have been applied and redundancy follows it is essential to ensure the actual dismissals follow a fair procedure and you are notified of the outcome within a reasonable time.
An employee on maternity leave is entitled to be consulted as part of a redundancy process in the same way as employees who are not on maternity leave. They should be involved to the same extent as employees in the workplace.
Those on maternity leave are treated preferentially where the role falls within the definition of ‘suitable alternative employment’ (see above). If you are on maternity leave and you are subject to consultation for redundancy, and there is a suitable alternative role available, you should be given that role in preference to any other colleague who may also qualify. Generally, you are not required to apply for that role or to attend an interview for it.
Employees with two years’ continuous service are entitled to a statutory redundancy payment compensation for long service, in addition to notice pay (which may be worked) and accrued holiday pay. The amount of this payment will depend on the age of the employee, the length of their continuous service and the statutory weekly wage amount. The current level of redundancy pay is capped at £538 per week.
You may also be entitled to enhanced redundancy payments under your employment contract or the organisation’s policies and procedures. See here for an online redundancy payment calculator to check your entitlement.
In the event your employer is insolvent it may be possible to apply for redundancy payment from a government insolvency service. See here for further details.
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