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Redundancies - the law

Dealerships across the UK are restructuring their workforces in order to cope with declining sales volumes.

Redundancy. AM interviewed employment law specialist Julian Hemming of Osborne Clarke to learn the key points which dealership managers must follow to avoid potential litigation while making redundancies.

There are two processes in making redundancies, depending on the number of cuts proposed.

If more than 20 redundancies are proposed within a single 'establishment', such as a dealership or a particular function within a group, employers must follow a collective redundancy regime.

If fewer than 20 jobs are under review, the employer must follow an individual regime.

Collective redundancy

First step in collective redundancy is to inform and consult with any union or elected employee representatives, if relevant. This notice must be given 30 days ahead of any redundancy process beginning.

Hemming advises that this notice includes the reasons why redundancies are necessary, the number of employees proposed for dismissal, the method of selecting those employees, and how redundancy pay will be calculated.

On consulting with employee representatives for their feedback, Hemming suggests the employer and representatives should sign a document to state what has been agreed and what points were discussed but not agreed upon.

After the end of the 30 day consultation period, employees made redundant are entitled to their notice period, at the end of which they are entitled to statutory redundancy pay as a minimum.

Individual redundancy

If fewer than 20 jobs cuts are proposed, the employer must consider each employee individually.

Hemming says a 'general fairness' test applies here, where the employer must show they have first considered alternatives to redundancy, such as redeployment, temporary lay-offs or pay cuts.

Next, the employer must decide the fairest criteria to select people for redundancy, such as disciplinary record, absence record, skills and qualifications.

Once employees have been scored on the criteria, begin the statutory dismissal procedure by writing to each individual telling them they are at risk of redundancy and inviting them to a meeting.

At that meeting, they may review their own score and suggest alternatives to redundancy, which the employer must consider.

The employee must be invited to a second meeting, accompanied by a colleague if desires, at which the outcome of the consultancy process is confirmed.

The employee then has a right to a final appeal to the employer, before beginning their statutory notice period and then being entitled to statutory redundancy pay as a minimum.

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