reasonable for employee to reject alternatives to redundancy which would have been accepted by a reasonable employee

Posted on January 26, 2012 by Martin Malone

Is it reasonable for someone to refuse a job offer as an alternative to redundancy if a reasonable person would have accepted the job offered? Yes, according to the Employment Appeal Tribunal in Readman v Devon Primary Care Trust.

Mrs Readman was at risk of being made redundant by her employer and was offered three posts as alternatives to redundancy. Two of them were at a lower grade and the other was at an equivalent grade. She tried one of the lower grade jobs for a four-week statutory trial period but she resigned from this and claimed a redundancy payment.

Instead she was offered the equivalent grade position as an alternative to redundancy. She was asked to accept the offer and, if she did not do so, the Trust would decide whether to make a redundancy payment or not, based on whether her refusal to take the job was unreasonable.

Critically Mrs Readman began her nursing career in 1976 and she had worked as a community nurse since 1985. The alternative job at an equivalent grade was as a Modern Matron and would require her to work in a hospital setting. She did not wish to do so. The Trust decided that her refusal of the job offer was unreasonable and therefore declined to make a redundancy payment.

The employment tribunal therefore had to decide:

(1) whether the offer of employment was an offer of suitable employment, and
(2) whether the employee had unreasonably refused that offer.

Continue reading →

consultation on consultation

Posted on December 8, 2011 by Martin Malone

Two areas have been flagged for possible changes in the future. There are “calls for evidence” on both TUPE and redundancy consultation processes.

Under the current Regulations TUPE places an obligation on both the transferor and transferee to provide information to, and to consult with, the representatives of their respective employees who may be affected by the transfer.

This can include employees who are not part of the transfer, but who are affected by the transfer.

TUPE also has the effect of transferring trade union recognition agreements, as long as the transferring group of employees maintains a distinct identify from the rest of the transferee’s business.

The transferor and transferee must inform and consult the recognised trade union. If there is no recognised trade union, the employees must be given the opportunity to elect their own representatives. Continue reading →

termination payments: a trap for employers

Posted on July 25, 2011 by Martin Malone

A Ms. O’Farrell worked for Publicis Consultants UK Ltd. Her contract provided for three months’ notice. She was made redundant in May 2009 and was provided with statutory redundancy pay and holiday pay. Her dismissal letter also said that she would receive an ex-gratia payment equivalent to three months’ salary (£20,625) free of Tax and NI deductions. Continue reading →

a sign of the times: much news about redundancies

Posted on July 19, 2011 by Martin Malone

Although sometimes used as a euphemism for dismissal, “redundancy” is nothing of the sort. It is a reason for dismissal, which may of course be fair or unfair dismissal. Three recent cases have shown that the Employment Appeal Tribunal will take a practical, pragmatic view of what is fair and unfair. The first two are concerned with selection of employees for redundancy dismissal and the third concerns consultation obligations. Continue reading →

Unions Unhappy about Government changes to Civil Servant’s “Redundancy” entitlements

Posted on February 15, 2011 by Will Burrows

Civil servants are not eligible to receive statutory redundancy pay. Instead they have entitlements under the Civil Service Compensation Scheme (this, of course, covers only civil servants, not local authority and other public sector employees who are eligible for statutory redundancy pay under normal rules).
A year ago, in February 2010, the government attempted to amend the terms of that scheme to reduce the maximum limits on lump sum payments to civil servants whose appointment is terminated prematurely (ie who take compulsory or voluntary redundancy). However after a judicial review instigated by the Public and Commercial Services Union the High Court quashed the government’s amendments as unlawful in May 2010.
Following this setback for the government, the Superannuation Act 2010 was passed shortly before Christmas. Along with the Superannuation Act 2010 (Repeal of Limits on Compensation) Order 2010, this changed the law to remove the requirement for there to be union consent to detrimental (to staff) changes to the Civil Service Compensation Scheme. The Act does, however, introduce a requirement that any such change must be the subject of a genuine consultation whose outcome must be reported to Parliament.
The Paymaster General, the Rt Hon Francis Maude MP, then laid before the House of Commons the renegotiated Civil Service Compensation Scheme (Amendment No.2) Scheme 2010 and associated revisions to the Principal Civil Service Pension Scheme. Mr Maude identified the main provisions of the new compensation scheme, which came into effect on 22nd December 2010, as being:
• voluntary redundancy – for employees below normal retiring age, compensation will be one month’s pay per year of service, up to an absolute maximum of 21 months’ pay with a taper for people who are approaching pension age. For employees above normal retiring age, the payment will be one month’s pay per year of service, up to a maximum of six months;
• periods of notice – the minimum notice period for all staff will be three months;
• compulsory redundancy – compensation will be one month’s pay per year of service, up to a maximum of 12 months’ pay, and all staff will be offered the opportunity to take voluntary redundancy before being made compulsorily redundant;
• pay thresholds for redundancy payments – redundancy payments for staff earning less than £23,000 (full-time equivalent) will have their lump sum payments calculated using this figure; those earning more than £149,820 will have their lump sum payments calculated by reference to this figure.
The above terms should be compared with the absolute maximum statutory redundancy pay in the private sector of £12,000 (available to those who have worked for at least 20 years after their 41st birthday, subject of course to better contractual terms if any have been agreed with their employer).
The PCS Union remains unhappy. PCS general secretary Mark Serwotka has implied that his union may take legal action on the basis that the changes infringe the Human Rights of the Union’s members. He said in a press release “We have successfully defended our members’ rights in court before and believe we have a very strong case to do so again.”

New compensation limits from 1 February

Posted on January 25, 2011 by Martin Malone

Under the annual index-linked formula new limits for unfair dismissal compensation, redundancy payments and other awards come into effect on 1 February.

The main changes are as follows:

the limit on a week’s pay for calculating redundancy payments and the basic award for unfair dismissal increases from £380 to £400;
the maximum compensatory award for unfair dismissal is increased from £65,300 to £68,400;
guarantee payments increase from £21.20 to £22.20 per day; and
the minimum basic award for unfair dismissal resulting from the health and safety, employee representatives, trade union and occupational pension trustee provisions increase from £4,700 to £5,000.

The new rates apply if the event giving rise to unfair dismissal or redundancy occurs on or after 1 February.

Full details are available here.

Does redundancy consultation matter any more?

Posted on November 29, 2010 by John Booth

From the number of enquiries I deal with relating to redundancy at the moment, there appears to be an increasing incidence of employers failing to consult potentially redundant employees, and relying on the argument that “they would have been made redundant anyway, and the statutory procedure has been done away with now, hasn’t it?”, in an attempt to speed the process up. That is in many cases far too hasty and could end up being very expensive! Tribunals are loath to support employers in that situation where absolutely no consultation has taken place. What if two employees were prepared to do a 50/50% jobshare? The Tribunals won’t simply accept the argument that “that wouldn’t work in our company” unless there is clear and convincing evidence that that is the case. Are you sure that the redundancy pool has been correctly decided on? Some posts which are deemed to be stand-alone posts, (i.e. where only one person carries out that function, so there is no need to carry out a selection process) turn out not to be so, because there is someone else only slightly more senior who carries out essentially the same function, or someone at the same level who works at the branch down the road who does the same job.
It is a sad reflection on contemporary society that the law has become so complex that a sensible, fair minded employer ( or employee for that matter) cannot either understand the law or get through the redundancy process without ending up in Tribunal, but in my opinion that’s where we’re at.
Which bit of redundancy do you find most difficult to follow?

New Government Revisits Cuts in Civil Service Redundancy Pay

Posted on July 5, 2010 by Will Burrows

The new Government is, according to this morning’s papers, meeting with unions in an attempt to renegotiate severance pay for civil servants.

Civil service redundancy pay is not currently governed by the same law as the private sector. Payments for the private sector are made in accordance with section 162 of the Employment Rights Act 1996 or any supplementary contractual provisions. Civil servants are excluded form this payment scheme by way of section 159 of the same enactment; however, over the years unions have achieved incredibly generous redundancy payment packages via collective negotiations. For example, whereas by section 162 an employee would only receive a maximum of £380 for each year worked, the agreements reached by some unions in some sectors mean that redundant employees could receive up to 3 months pay per year worked. The Government would have to pay considerable amounts in redundancy pay if it is to achieve its target of 25% cuts across the board.

All this comes after a High Court ruling in a case between PCS and the previous Government in March that ruled that it was unlawful to vary the severance terms without consent of the unions.

http://www.guardian.co.uk/politics/2010/may/10/civil-servants-redundancy-pay-court

If the Government is hoping to achieve a consensus amongst the unions to markedly reduce redundancy pay then it will have to offer a pretty big incentive in order to gain union consent. A cynic may point out that the rumours of a 40% reduction in spending across all Government departments that have been circulating over the weekend have materialised just before these talks. I would suspect that the Government will need to give guarantees on jobs in order to achieve a cut in redundancy pay.

OBR predicts fewer people in work by 2016

Posted on June 30, 2010 by Will Burrows

The newly formed Office of Budget Responsibility (a potentially, and certainly previously, oxymoronic name which would surely have been the source of endless quips from Sir Humphrey Appleby) has analysed the impact of the 2010 Budget and surmised that 600,000 people will lose their job as a result.

The OBR has also indicated that fewer public sector workers will lose their jobs than expected because of the pay freeze currently in operation. The figures seem to indicate 30,000 more public sector workers will lose their jobs than under Labour’s plans.

However, employment overall will rise during the 5 year parliament.

One must remember that this is merely a paper exercise and that the reality of making 600,000 people redundant is naturally incredibly difficult. It will create huge logistical problems and costs billions in payments and legal fees, however, the Government is certain that this is necessary to address the structural deficit to ensure that we are not reliant on variables such as immigration and inflated housing prices in order to create growth.

Despite the Government’s pledges to raise pay for public sector worker earning less than £22,000, Bob Crow’s entirely unbiased response was “[the Government] started this fight with the working class and we are up for it”.

More Job Cuts and Pay Freezes in 2010 says CBI

Posted on December 21, 2009 by Will Burrows

The CBI has warned that 2010 is unlikely to represent a change in the fortunes of the UK economy. It predicts that 2010 will see more job cuts, pay freezes and other devices used by businesses to cut costs and restructure.

Whilst it is likely that the economy will return to growth, without a major force or sector driving growth, it is likely to be years before we see any real change in fortunes. The restriction of credit is still a large problem for many small and medium sized businesses and that is unlikely to change in the next 6 months.

I am personally concerned that the removal of the various economic supports put in place over the past 18 months will stunt growth. I am also concerned that tax rises are coming to reduce our enormous budget deficit (where has it all gone Gordon and will there be an inquiry into Government profligacy when this is all over?) and that will dent consumer spending and severely restrict any growth in the retail sector. The increase in employer NI contributions could see similar restrictions in spending in the corporate sector.

Bah, humbug.