Companies are facing higher employee costs. KAREN HARVIE offers some advice on how to stay within the law when making staff redundant
A recent CIPD survey found a sharp increase in the number of UK businesses’ intending to reduce their payroll. Almost a third are expected to cut staff through a combination of redundancies and recruitment freezes as increases to employer national insurance contributions and the national minimum wage are borne by the workforce, as well as by consumers through increased prices. And that is before the effect of perceived enhanced protection for staff in the employment rights bill kicks in.
Businesses will need to be aware of the UK rules on redundancies to avoid even costlier employment tribunal claims wiping out any savings.
The rules are different depending on how many redundancies an individual employer is planning within a rolling 90-day period: 20 or more and the employer will have to put in place arrangements for collective consultation (including the election of representatives) and this should start at least 30 days before the expiry of the first notice of dismissal (45 days where a 100 or more dismissals are planned).
Collective consultation procedures are complex (and include potential criminal sanctions) therefore legal advice should be taken as early as possible.
Redundancies are fair dismissals if the redundancy is genuine – a closing workplace or diminishing need for employees to carry out work of a particular kind – and the employer carries out a recognised process in selecting the affected employees and consulting with them.
In very short terms, a fair process will consider avoiding redundancies; the appropriate pool from which selection is to be made; selection criteria; individual consultation (in addition to collective consultation); alternatives to dismissal, notice; redundancy pay.
It shouldn’t need to be said but employers should not take guidance from what is happening across the pond. The laws are different there.
What there is in common is that employers will often seek to avoid a compulsory redundancy process by seeking volunteers for redundancy. Often that is with the carrot of an enhanced redundancy payment. To avoid losing all its longest serving and most experienced staff (who would stand to gain the most) the employer often retains the right to decide whether a particular employee’s application is accepted or rejected.
I am guessing Elon Musk and his Department of Government Efficiency (‘DOGE’) don’t really care which employees they shed in their move to lose around 300,000 US Federal Government jobs (and many more contractor roles).
On 28 January the US Office of Personnel Management sent an email to roughly two million workers, offering them “deferred resignation”, the chance to resign and get paid until the end of September.
More than 75,000 federal government employees voluntarily took the buyout. Over this last weekend remaining employees were required to justify their jobs by emailing a list of tasks they performed in the past week. Musk said failing to respond to the email would be “taken as a resignation”.
Please don’t take your lead from Musk.
Karen Harvie is senior associate in employment law at Aberdein Considine
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