P&O Ferries have made 800 staff redundant; offering £36.5m in payments to impacted staff. A video message regarding the termination of their roles spread outrage across the nation and the world.
P&O Ferries initially denied that they had broken the law and that their workers were sacked without any warning or consultation. They explained that those who were affected were employed outside the UK. On the contrary, union representatives said that the exit packages offered were pure blackmail and threats.
According to new legislation announced in the Queen’s speech, ferries that dock at British ports will now be forced to pay staff at least the UK minimum wage nothing less. P&O Ferries were accused of using fire and rehire tactics and paid to seafarers below the minimum wage.
P&O Ferries have failed to follow the correct process for making large-scale redundancies, as they did not consult with unions. The company has received major backlash from government and the public which will be hard to recover from. What does this mean for future employers?
Why is it important to go through a redundancy process?
The breakout of the coronavirus pandemic has caused a major disruption in the way businesses operate. Surviving these times may require restructuring or downsizing, and consequently making redundancies. As an employer you would need to ensure the rights steps are followed. This is to minimise the risk of unfair dismissal claims.
We have highlighted below the key aspects to consider when making someone redundant:
1. What to do before commencing redundancy process?
Depending on the type and size of business, employers need to identify reasons why the redundancy is necessary. Redundancy planning should be considered, so that you have a fair reason for the redundancy to rebut any potential claims. Alternative options that could be used to avoid redundancies should be examined during this stage. This might include ending contracts with agencies and contractors, re-training employees, offering reduced pay.
For a smooth handle of the redundancy process, the employer should develop a plan of the entire process including a timeline and specific targets. Redundancy for employers can be stressful should you find yourself in legal complications with employees, so be sure to have redundancy plans in place. With the right redundancy planning, you can protect yourself and your business should you find yourself facing a claim.
2. Redundancy process
Although every business facing financial difficulty haste to cut staff costs, it is essential not to haste and instead meet some legal obligations when making redundancies. The risk is that an unfair procedure may give rise to claims of unfair dismissal.
3. Employer duty to undertake a fair selection process
Selection stage in redundancy entails firstly the choice of the criteria for selection process, secondly identifying a pool of employees and finally the application of the chosen criteria to the pool of the employees.
The selection criteria should be as possible objective and must not be discriminatory. Although the criterion last in, first-out is extremely popular, the employer should be mindful of the indirectly discriminating against younger employees. A safer criterion to use is point scoring where several criteria should be applied to the employees in the pool and scores allocated to each employee. Unless there is only one employee affected by the redundancy, in all other cases the employer must identify the pool of employees who perform the same or similar roles.
4. Employer duty of consultation
Employers should be mindful of the consultation stage as the way it has been carried out impacts whether the employer acted reasonably in deciding to dismiss or not. Consultation may also prove to be useful as the employees may come with solutions that the employer has not previously considered.
Whenever practicable, the employer should give an advanced warning to the affected employees as soon as possible. Effectively communicating redundancy is particularly important because it can affect the employer’s business reputation. It is good practice to ensure that the employees know about redundancy before any public announcement. Similarly, the employees at risk of redundancy should be informed before the rest of the workforce.
Employers should organise and hold individual meetings with each potentially affected employee. The consultation should be a dialogue between the employer and the employee over several weeks. The issues to be discussed during the consultation include the reason for the redundancy, explaining the selection criteria, the redundancy package, the alternative employment options (if any). The employer needs to allow the employee to express their views, suggestions, and objections. If no alternative solution has been agreed upon, in the final meeting, the employer will confirm to the employee the termination date, payments, and the right to appeal.
Employers should make a reasonable effort to identify alternative employment. This duty is dependent on the size of the business. It might be an easy process for a small business, but it might take longer where there are a group of companies. If in doubt of whether the employee is a good fit, the employer may conduct an interview process or a trial process. If the employee turns down the offer of employment, careful consideration should be given to the refusal. If there is an unreasonable refusal, the employer may not need to make any redundancy pay to the employee. Alternatively, if a refusal is genuine, the employer must continue to make the redundancy pay.
Apart from individual consultation, where an employer intends to make 20 or more employees redundant over a period of 90 days or less, the employees have a right to collective consultation. This would entail that the employer should provide the employees’ representatives with certain specified information and also consult with the employee representatives.
5. Duty to give employees a minimum statutory notice period
The employer is required to give the appropriate notice to the employee before dismissing them. It is important to know how much notice for redundancy the employer must provide their employees with as they are not allowed to give less than the minimum period required by law.
The statutory minimum period that an employer must give to the employees is at least one week’s notice if they’ve been with the employer between one month and two years, an extra week’s notice for every year they have been in service between two and twelve years and twelve weeks’ notice for employees being in the employer service for twelve years or more. If the contract of employment provides a longer notice period, the employer should give the employee this notice period.
The notice period begins the next day the employee is informed and is advisable that the employer ensures that records are being kept of the dates the notice was given to the employees.
Depending on an employees’ particular circumstances, the employer may choose to terminate the contract without a notice period and instead to pay employees. This is known as ’pay in lieu of notice’.
Another possible option is placing the employee on ‘garden leave’ if permitted under their contract of employment. This would mean that the employee does not work during the notice period, but their employment contract and the obligations under this contract continue.
Exceptionally, under certain circumstances, the employer could dismiss an employee without giving them the notice period.
Employees are entitled to time off during the notice period and the employer is under a duty to allow employees a reasonable period off to look for a job or arrange training.
6. Right to a redundancy pay
The employers are under a duty to make redundancy payments to employees considering both their statutory and contractual entitlements. The amount the employees are entitled is based on their age, weekly pay, and the length of service.
The contract of employment and staff handbook should be checked to see whether they mention redundancy pay. If the contract states a higher amount of redundancy pay, the employer should pay this sum.
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