This week the experts, Adam Partington and Esther Smith advise on whether this HR practitioner is being made redundant fairly.
The question: Am I really redundant?
I have worked for my current employer for 19 years as their HR/Payroll & Benefits Manager. Four weeks ago I was called into a meeting with the MD who advised me that due to his disillusionment with employees (and with particular reference to an out of court settlement he had to make last year) he had engaged the services of a company that provides 24 hr legal advice, standard templates/contracts, representation at tribunal and insurance if an award is made against the company. He therefore stated that as some of my role had gone he would be reducing my salary by 50%, leaving me with Payroll & Benefits and he was expecting that to start after four weeks. I was stunned to say the least.
I asked him if we could meet again to give me time to think about the situation. I met him again and asked him why he felt that only 50% of my role remained. He said it was just a gut feeling. I produced my job description and advised him that unless there were any difficult HR issues, the split was probably more like 80/20 (HR being 20).
I proposed that I would take the Payroll & Benefits role for 74% of my salary. He said he would consider it and we arranged to meet again. At the last meeting he said that he would only go to 60%. He also mentioned me going self-employed and being paid on a freelance basis as that would give me some tax breaks. I said that being self-employed was not an option and I didn’t believe that what he was offering was a fair alternative to my current role and that we should probably discuss redundancy. He said he couldn’t possibly discuss that at the time and we arranged to meet again.
We met last week and he told me that this was an official meeting and he was advising me that due to the need to cut costs he was going to be making redundancies and he was advising me that I was at risk and that we would meet again on 3 May when we could discuss any proposals! I briefly said that was what I thought I had done four weeks ago to which he said that was "informal" and this is now official. My initial thoughts are that;
a) he came to me with a fait a complet and the official procedure is now sticking plaster because he breached my contract by not consulting me before he had decided to remove my role.
b) he is now saying it is to do with costs (which he didn’t mention before) yet he will still need someone to do the payroll. By my calculation the breakeven point between my offer of 74% of salary and redundancy + part time payroll officer is likely to be January 2013.
c) we already have an insurance in place that covers legal representation at tribunal + insurance cover for any awards made.
Is my position really redundant and if so, is 60% of salary a fair alternative?
Adam Partington, solicitor, Speechly Bircham
Redundancy is one of a number of potentially fair reasons for dismissal. Redundancy is defined in law and includes a situation where an employer has a reduced requirement for an employee to carry out work of a particular kind. If your employer is able to demonstrate this, then he would have a decent argument that your position is redundant.
Nevertheless, in addition to there being a substantive redundancy situation, an employer also needs to carry out a fair process with you before making you redundant. Among other things, this involves consulting with you about the possibility of your role being redundant, and considering whether there is alternative employment available. If there is not a redundancy situation, or a fair process has not been followed, then a dismissal is likely to be unfair. If your employer had made up his mind to make you redundant before consulting with you about that possibility, then the dismissal would probably be procedurally unfair.
A further consideration is that you appear to be suggesting that the HR function is being outsourced to an external company. If that is the case then it could amount to a “service provision change” which is a “relevant transfer” under The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). In such a situation, an employer needs to inform and consult with you about this before it happens, or risks being liable to pay a protective award of up to 13 weeks’ gross pay.
If a relevant transfer occurs then under TUPE your employment would transfer to the external company, although your reference to the fact that only 20% of your time was spent carrying out the HR function weakens an argument that a relevant transfer has occurred. If a dismissal arises in a situation where TUPE does apply, it is unfair unless it is unconnected with the transfer or for a reason connected with the transfer that is an economic, technical or organisational reason entailing changes in the workforce.
On the available information it is difficult for me to comment on whether doing the reduced role on 60% salary is a good deal for you. If you decide that it is not, and you are dismissed, you may have grounds for arguing that your dismissal is unfair but you should take specific legal advice in this regard. Claims for unfair dismissal need to be brought in an employment tribunal within 3 months of the date of the dismissal.
Esther Smith, partner, Thomas Eggar
This is a tricky situation, and one that I am sure you are not enjoying finding yourself in particularly after 19 years of service!
My initial response is that it appears from what you say that your job has been outsourced to the new provider of services under TUPE. This appears to be a classic service provision situation, where a business has decided to outsource an activity previously carried on in-house. As such you should have been consulted with about the proposed transfer and should have transferred to the new provider with protection of employment, on your existing terms and conditions.
Alternatively, if there is an argument that TUPE does not apply (for which further information is really needed) there is an argument that there may be a redundancy situation. However, the fact that even before this discussion, there appears to have been a unilateral variation of your contract, in reducing your salary by 50% would give rise to a potential constructive dismissal claim too, irrespective of whether there was any fair redundancy situation, or process.
However, to answer your specific question of whether or not you are redundant, a redundancy situation arises in law where an employer’s requirement for someone to do the work they are employed to do has ceased or diminished, and that can arise as a result of the employer no longer wanting the work done (in this case because part of the work is done by an external party) or because of financial pressures or reorganisations. So there is a potential redundancy situation here, but it is complicated by the possible TUPE situation and unilateral variation of contract, which are matters you should seek specific advice on.
Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.