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Money’s too tight to mentionRestructuring and its implications Thursday 26th June 2014
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Defining redundancy
» Section 139 ERA “…if the dismissal is wholly of mainly attributable to …”»Closure of the entire school or place of work»A reduction in the need for employees to do work of a particular kind at
the school
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Examples of redundancy
» Reduction in the need for employees to do work of a particular kind…»Reduction in the number of employees due to economic pressures
(e.g. a fall in student numbers or budget cuts)» Internal reorganisation to make more efficient use of rules and duties»Technological developments resulting in change to some or all job
functions»Relocation of the school
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New school academy – case study
Background» New school academy has seen student numbers drop over the last few
years and projected student intake levels are forecasted to be low for the next two-three years – placing pressure on the schools budget
» New school academy needs to make urgent cost savings…» The school Business Manager and the Head Teacher have looked at the
budget and feel they need to consider making one teacher redundant» There is a surplus of teaching lessons in English» The school could reduce the number of English teachers by one, without
any detrimental impact on teaching» All teachers at the school have more than two years’ employment
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Governor approval
» Call a meeting with the Governors» Explain the provisional plan» Discuss alternatives» Explain why this is necessary» Seek formal approval and delegated authority to progress» Consider compulsory collective consultation with the Unions» All Governors are different, some hands on and some hands off
How do we start the process and how do we ensure there are no costly Employment Tribunal claims?Q
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Redundancy selection - pool
» Identify an appropriate pool for selection (which teachers should be included in the pool)
» Consider appropriate selection criteria (how we should score them)» Follow a fair and reasonable procedure (including following any policies
you have)
We want to make one English teacher redundant. Who should be selected?Q
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Redundancy selection - criteria
» Selection criteria»Clearly defined»Objective»Capable of independent assessments»Potentially fair selection criteria may include:
»Performance, length of service, attendance records, timekeeping, disciplinary records, qualifications
» Note – there are no fixed rules about what criteria to use and generally speaking a school has a wide measure of flexibility in this regard (unless collectively agreed or customary selection matrix)
What should we include in our selection matrix? Can we take a commercial approach?Q
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Redundancy selection – criteria
» Subjective criteria (unable to substantiate)» Double counting» Wrong scores» Discrimination
»Selection criteria»Application of criteria
I’m comfortable with the selection matrix we have used, but are there any areas of concern that we should be aware of?Q
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Commercial decision
» A Tribunal should not look behind the school’s decision – provided it is genuinely the reason for the dismissal
» Association of University Teachers v University of Newcastle upon Tyne [1987] ICR 317»The EAT decided that a lecturer was redundant, notwithstanding
continuing student demand for his course. The University was entitled to decide that it could no longer afford such a course following a cut in funding
The English teacher selected has performance issues. I’m concerned that a Tribunal will think we have dismissed for performance reasons – not redundancy?
Q
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Consultation with the individual
» Arrange a formal individual consultation meeting with individual employee at risk of redundancy.
» Make sure the invite letter is carefully drafted.» Provide the employee with a copy of their scores.» They have the right to be accompanied by a TU representative.» Take advice on what questions / approach to take at the formal
consultation meeting.» Importance of open mind and stressing the redundancy proposal is only a
provisional decision at this stage.
OK, we have scored the employees and one teacher has scored lowest . What do we do next?Q
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Consultation with the individual
» Bumping is the process of moving a potentially redundant employee (A) into another role, and dismissing the employee currently performing that role (B).
» There is no general obligation on an employer to ‘bump’, but in some circumstances it may be unreasonable not to do so. Always consider.
We held our individual consultation meeting with the teacher. She wants to know why we haven’t considered “bumping”?Q
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Consultation with the individual
» There is an obligation to look at alternatives, including whether there is any suitable alternative work available
» Consequences of failure to comply with the obligation»unfair dismissal claim
During the individual consultation meeting the TU rep asked what we had done to look at alternative roles.Q
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Alternative work
» The scope of the duty to look for alternative work»Reasonable steps»Does the obligation extend group-wide? e.g. LA maintained schools
and Multi Academy Trust Schools…» Suitability and reasonableness
»Onus on proof regarding suitability and unreasonableness is on the employer determined on a case by case basis
»Both issues are questions of fact for the Tribunal
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Alternative work
» Suitability and reasonableness»assessed objectively AND subjectively» relevant factors include:
» job content and status»pay and other benefits»working hours» job prospects»employee’s age and/or health»acceptance of another job»personal preferences» insecurity of new job»different skills required
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Alternative work
» Offers during maternity leave, adoption leave or additional paternity leave»suitable alternative vacancy»not substantially less favourable»effect of finding a suitable alternative vacancy
» Trial periods»statutory trial periods
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Alternatives to redundancy
» You should consider alternatives, including:-»Voluntary redundancy»Contractual changes (e.g. pay / hours) »Sabbatical / unpaid leave»Secondments»Pay freeze»Recruitment freeze
» Should consider but not mandatory to adopt…
The TU rep has asked why we haven’t considered other alternatives? For example, why don’t all other teachers take a pay cut or reduction in hours?
Q
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Second redundancy meeting
» It is always advisable to have at least 2 formal redundancy consultation meetings with the employee
» Discuss and respond to any points raised» Continue to look at alternatives and ways to avoid the proposed
redundancy» Document the process with formal invite letters and minutes of the
consultation meetings
We’ve had our first individual redundancy consultation meeting? What happens next?Q
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The redundancy package
» Formal decision letter – with the right to appeal. » The redundancy payment
» Custom and practice?» Notice pay? PILON clause?» Age/salary/length of continuous service» Tax free» Pension issues (over 50 years)» Why enhance payment?» Have they taken employment with an “associated school” Redundancy
Payments (Continuity of Employment in Local Government etc) (Modification) Order 1999
» Settlement agreement?» Charitable funds…
We are going to confirm redundancy. What should the employee be paid?Q
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Practical steps
» Minimising the negative impact»Follow your procedures and adopt a fair process»Keep the union on board and keep them fully advised of your proposals»Maintain communications with the employees»Consider enhancing the package – linked to a settlement agreement»Provide reasonable time off during notice period to look for alternative
work»Consider whether TUPE applies if outsourcing work (e.g. outsourcing
cooks or cleaners)
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Questions
Paul Scope
Partner | Employment
T: 0191 204 4352
Graham Vials
Associate | Employment
T: 0191 204 4383