Considering Alternatives to Redundancy
Posted on: 20/10/2020
In this latest blog in our series on the topic of redundancy we are looking at considering alternatives to redundancy during the consultation process.
ACAS states that during the redundancy consultation period, the employer must discuss with employees “ways to avoid or reduce the redundancies” or the effects of the redundancies. In some cases, such as when a whole business is closing, there may be very few options. However, in other situations, options that deliver a financial saving in other ways may warrant consideration. These may include:
- Pay freezes or cuts;
- Reduce or stop bonuses;
- Pay deferral schemes;
- Stopping overtime;
- Sabbaticals with reduced or no pay;
- Reduce or stop the use of agency workers;
- Short-term working or lay-offs (see our blog last week on this topic – here);
- Reduce enhanced pension payments.
Some of these options will require a change to employment contracts and so employee agreement should be sought. Key to this is open and honest discussion about the business position, and the financial savings that are needed to ensure job security.
If employees propose measures such as the ones above as an alternative to redundancy, the employer has an obligation to consider and respond to them. This doesn’t mean that these must be agreed, as there may be good business reasons why proposals are not viable. However, employers should ensure they are able to explain why they do not consider the proposals to be viable, and keep a written record or the decision-making process, with any support documents.
In situations where none of the above alternatives apply, it may be that a particular role or roles are made redundant. However, this does not automatically mean that an employee’s employment will be terminated by reason of redundancy, if another suitable role can be found for them elsewhere in the organisation.
The question of suitability is one for both the employee and the employer to determine. An employer may not view a vacancy as suitable if it would require substantial re-training as the employee lacks many key skills for the job. An employee may not feel a vacancy is suitable if the terms are less appealing, e.g. lower pay, a much longer commute, or inconvenient working hours.
There is an automatic right to a four-week trial period in an alternative role, and if the employee and employer agree that things are not working out, then the employee has the right to redundancy pay when they leave. However, if an employer does not accept an employee’s reasons for turning down an alternative vacancy (i.e. it is unreasonably turned down), the employer may refuse to pay redundancy pay.
Special rules apply to employees who are on maternity leave. An employee on maternity leave who has been selected for redundancy must be offered a suitable vacancy before any other employee (even if an employer believes the other employee to be a stronger candidate). If an employer doesn’t do this, the dismissal may be automatically unfair. In this situation, to be considered suitable the alternative vacancy must be no worse than the employee’s previous job with regard to location, terms, conditions and status.
If you are an employer and would like some support to consider alternatives to redundancy, please contact a member of the View HR team to discuss. However, in some circumstances, despite careful consideration of alternatives by employers and employees, sadly redundancy dismissals may be inevitable. In next week’s blog we will be looking at the topics of redundancy pay and notice.
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