No Image Available

Martin Brewer

Read more about Martin Brewer

Ask the expert: Is this redundancy fair?

pp_default1

This week the experts, Martin Brewer and Esther Smith, advise on whether this redundancy selection is fair.

 

The question: Is this redundancy fair?

The shop floor team consists of five employees working 42 hours per week (full time), three employees working 35 hours per week (part time) and six employees working a variety of other part time hours (25 and below).

We are in financial difficulty and need to cut costs by reducing staffing levels and want to keep the fivecontracts at 42 hours, reduce the 35 hour contracts from three to two and reduce the other contracted hours to just one 18 hour contract.  This justification is based on the operating hours of the store and the rota that covers those operating hours. The changes will save the company about £20,000 per year.

For the redundancy pool we want to only include employees on the 35 hour contracts and below on the basis that there are no changes planned to the number of 42 hour contracts and therefore none of the 42 hour posts are redundant. My thinking with this is that if they were to be included in the selection pool the 5 people on 42 hour contracts will claim those five posts as "suitable alternatives" anyway, and the other staff could not because the contract varies in terms of contracted hours so the 42 hour contracts for them would only be an "alternative". My understanding is that legally we have to place people in suitable alternative posts first and look at only alternative posts second.

Is this understanding correct?  And if so how does this get around part time workers discrimination because in effect only the part time workers would go into the selection pool because the number of part time posts are reducing?

 

Legal advice:
 

Martin Brewer, partner, Mills & Reeve
 

I don’t think your understanding is correct. So far as the pool is concerned the legal test is that you should not unreasonably limit the pool. And you have quite correctly identified the potential for discrimination on the ground of part time status.

It seems to me that you may end up with a situation where a dismissed part timer argues that he or she would have been prepared to work increased hours and that redundancy selection, being limited only to part timers is discriminatory and can’t be justified. You should not confuse selection with alternative employment.  Base your pools on the work type/department etc. Not on hours.

Martin Brewer can be contacted at [email protected]. For further information, please visit Mills & Reeve.

**************

Esther Smith, partner, Thomas Eggar
 

You are right to be concerned about the statutory protection against part time workers, and there is a risk here that if you simply placed those employees on part time contracts in your organisation at risk that you could face such a claim. I assume, although you do not say so explicitly, that the work these people are employed to undertake is broadly similar irrespective of the hours they actually work. Therefore I can see an argument that says, quite convincingly, that what you are looking for is a reduction of £20k costs overall, and that this could be achieved by looking at all employees across the board and making people redundant based on an objective skills assessment matrix (dismissing by reason of redundancy the bottom 3,4,5 etc depending on how many you need to let go to get to the cost saving you need to make, irrespective of their hours).

Also, this route may prove to be a more commercially sensible one, as presumably you want to retain the best employees for the business going forward, which is not dependent on the hours they are contracted to work.

You are right in theory in what you say about suitable alternative positions, although I should clarify that the obligation to consider suitable alternative employment arises at the point that you have decided to terminate an employee’s employment by reason of redundancy. If you placed all employees including the full time people at risk and selected the best employees from the group on the basis of their skills and abilities, there is no issue of suitable alternative positions, although those who score lower and are to be dismissed due to redundancy should be consulted with about other opportunities, if any, elsewhere in the business.

It really does sound to me as if you ought to get some specific advice in relation to this situation, what you are trying to achieve and how best to handle it.

Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.

Newsletter

Get the latest from HRZone.

Subscribe to expert insights on how to create a better workplace for both your business and its people.

 
 
 
 

Thank you.