#9721 - Redundancy Payments I Tutorial

INTRO	Where an employer’s need for an employee ceases or diminishes The redundancy payment is a reward for past services, the amount of which is prescribed by statute Payment should be made automatically at the end of the contract, but where employer fails to do this; employee may pursue claim in Employment Tribunal
ELIGIBILITY	Statutory claim; not all employees eligible Need to pass 4 tests: EMPLOYEE Not self employed DISMISSAL Contained in 136(1) ERA 1996: REQUISITE PERIOD 2 years of continuous employment at the date of the termination of the employment EXCLUDED CLASS Domestic servant for example, or a mariner Only affect a minority of cases
DISMISSAL BY REASON OF REDUNDANCY	Definition contained in – and occurs in three situations JOB REDUNDANCY Easy to recognise as business ceases to operate; those eligible are therefore automatically entitled to a redundancy payment POW REDUNDANCY Also relatively straightforward; closure of a branch for example, business as a whole continues but one branch closes… In such a situation there is still a possibility that an employee may not be entitled to redundancy payment; this is when employee has a mobility clause… Mobility clause allows employer to change employee’s POW; employer may tell those workers with mobility clauses in their contracts that they have to move branch… a refusal to move by the employee will not trigger redundancy… the dismissal will be due to the employee’s conduct rather than due to dismissal EMPLOYEE REDUNDANCY Where employer does not need as many employees; may be due to rationalisation or because employees have been replaced with machines It is usual for the employer simply to pay the money on termination of the contract… however:
ACTIVITY 1 – DISMISSAL BY REASON OF REDUNDANCY
OFFERS OF RE-EMPLOYMENT	Employer may not actually want employees to leave; may want those from the redundant branch to move to another branch for example Employers who make re-employment offers MAY NOT have to make redundancy payments IF the employees refuse the offer; but there are conditions… The offer of re-employment must comply with 141 ERA 1996: In the vast majority of cases the offer of re-employment will be an offer of an alternative job that differs in some respect, i.e. different branch or different job in the same organisation; so it is possible that the employee may choose to reject the offer Arguments will therefore revolve around suitability of employment and reasonableness of refusal; how does a tribunal decide? SUITABILITY OF EMPLOYMENT Compare such things as hours of work, rate of pay, duties, seniority, availability of training If, when taken as a whole, the new job is equivalent to the old job, it is a suitable offer of employment REASONABLENESS Given employee situation the refusal was reasonable… disruption the change would cause to the employee and his family if, for example, the employee had to move for the new job; education of employees children; impact of new shift pattern on family commitments; whether new place of work is accessible for employee FINAL POINT Employees entitled to a trial period to help them decide whether the new job is suitable – 138 ERA 1996 – four week trial period from the date they start work under the new contract… if at the end, or during, the period an employee decides that the job is not suitable, the employee will still have the right to a redundancy payment… Where an employer and employee agree a s.138 ERA 1996 contract for a trial period, an employee only has the statutory four week trial period in which to decide whether to accept the new job, see Optical Express Limited v Williams UKEAT/0036/07/CEA, EAT.
ACTIVITY 2 – ALTERNATIVE EMPLOYMENT	Scenario: ONES RELATED TO SUITABILITY (OBJECTIVE TEST) ONES RELATED TO REASONABLENESS OF REFUSAL (SUBJECTIVE TEST)
THE REDUNDANCY PAYMENT	Formula based Work back from date of termination of employment; maximum years to be taken into account is 20 EXAMPLE
ACTIVITY 3 – CALCULATING REDUNDANCY PAYMENT

FAIR AND UNFAIR REDUNDANCIES	One of the 5 permitted reasons under unfair dismissal rules… however a dismissal by redundancy may still be unfair if the employer does not handle the dismissal correctly; employer may then have to pay UD compensation as well as a redundancy payment Starting point is the guidance in POLKEY v A.E Dayton Services Employer must: Warn the employees, and consult with them or their representatives over the redundancy situation before the dismissals take effect Adopt fair selection procedure for choosing the employees who are to be dismissed Apply the above procedure fairly to the effected employees Take reasonable steps to reduce redundancies by considering alternative employment within the organisation If employer fails to comply, dismissal is likely to be unfair Also employer must statutory dismissal and disciplinary procedure; if employer fails to do this… the dismissal will be automatically unfair IF the redundancy dismissal is deemed unfair the employee will NOT walk...

#9721 - Redundancy Payments I Tutorial - Employment Law

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