How legal developments this year could affect employers’ strategies in the next
As 2013 draws to a close, we look back on the most important developments of the last 12 months in legislation and case law on redundancies.
Collective consultation
This year has seen fundamental changes to the collective redundancy consultation requirements in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A). In April the minimum consultation period for an employer proposing 100 or more redundancies was reduced from 90 to 45 days. The same reduction was made to the period of notice which employers must give to the Department for Business, Innovation and Skills (BIS). At the same time, the expiry of fixed-term contracts was excluded from the collective redundancy rules.
In June the EAT’s decision in USDAW v Ethel Austin Ltd significantly widened the situations in which the collective redundancy minimum consultation rules applied by removing the requirement for the proposed redundancies to occur “at one establishment”. Although this decision is being appealed, employers should assume that collective redundancy consultation obligations will arise where they propose 20 or more redundancies within a period of 90 days or less across all establishments within their organisation.
In November BIS published draft regulations, due to take effect in January, altering how TULR(C)A provisions apply in a Tupe context. The amendments allow transferees to start collective redundancy consultation before a transfer takes place, if the transferor agrees and various notification requirements are met.
Selection
Two EAT decisions this year have provided useful guidance on the difficult process of selecting employees for redundancy. In Mental Health Care (UK) Ltd v Biluan, the EAT criticised the employer’s use of forward-looking selection criteria which were normally used in recruitment exercises, and which gave no consideration to past performance. It concluded the dismissals based on such criteria were unfair. The case demonstrates the importance of employers having sufficiently comprehensive and up-to-date appraisal records to rely on when undertaking redundancy selection. It was the absence of such records (and a misplaced concern to avoid bias) which caused the errors in this case.
More recently in Jackson v Stephensons College, the EAT criticised an employer’s decision to reject an applicant for voluntary redundancy and make a colleague compulsorily redundant in his place. Again, that dismissal was found to be unfair. The facts indicated there was no real distinction between the skills of the two employees, and the employer was unable to offer any explanation for the difference in treatment. The case is an unusual example of a tribunal interfering in an employer’s decision on an application for voluntary redundancy. It’s a reminder of the importance of employers having a joined-up approach to decisions on voluntary and compulsory redundancies.
Redundancy pay
As well as the usual increase to the maximum amount of statutory redundancy pay (which now stands at £13,500), 2013 saw some key cases on the calculation of enhanced redundancy pay, and the risk of age discrimination which accompanies such payments.
Many enhanced redundancy schemes award larger sums to older workers, to reflect the perceived difficulty such workers face in securing alternative employment. The Court of Appeal has recently rejected an argument that such a scheme constituted unlawful age discrimination against younger workers, finding it to be objectively justified (Lockwood v Department for Work and Pensions).
However, once older workers get closer to retirement age, the need for such protection decreases, and the chance of employees receiving a “windfall” by being entitled to both pension and redundancy benefits increases. The practice of tapering redundancy benefits towards retirement age has therefore developed. An age discrimination challenge to this practice was rejected by the ECJ in 2012 (Odar v Baxter Deutschland GmbH). However, the ECJ held there will be a risk of disability discrimination if the tapering mechanism is linked to the possibility of ill-health early retirement, rather than the normal retirement age.
Roland Doughty is a partner, and Clare Fletcher a professional support lawyer at Slaughter and May
For more employment law
articles, visit HR-inform