Category Archives: redundancy

Can we do redundancy with respect?

We all dread redundancy

We all dread redundancy

I have a confession to make.  I have been making people redundant and helping employers to plan and implement redundancies for over 30 years.   But I am not as good looking as George Clooney

There are two other differences from the film clip – I don’t have a great script writer or the opportunity to re-run scenes when they go wrong, and I don’t believe that someone other than the boss should dismiss.

I have seen so many types of redundancy being implemented.  I’ve always done what I could to make the process as fair as possible, and the communication as clear and compassionate as possible.    I am not saying I have always succeeded.  Anyone in an advisory role can only achieve so much.  The truth is that the law requires certain processes at certain stages, but it does not require the human touch.

For many organisations, the human touch is simply not part of the management systems.  Between finance and metrics, goals, targets and measurements, the custodian of the ‘human touch’ is often not the manager – who has individual relations with each of their direct reports – but Human Resources.

I work with a number of HR specialists who display an admirable understanding of the people side of redundancy, and advocate open, clear and compassionate ways of communicating.    Other HR practitioners are much more focussed on compliance.

We have always known that some redundancy (and other) dismissals were coldly, even brutally carried out.   Over 2.7million people have been made redundant in the UK in the last few years, and the number is still rising.  If we’ve had a ‘failure rate’ of 10%, that’s an awful lot of people being treated very roughly.  The real numbers may be far higher.

When I started working with the Redundancy Crusader, I felt reasonably proud of the work I had done – all the planning, communicating, working through how to deal with difficult feelings.  Then I began to hear from individual people who had been made redundant.  Some had been subject to really brutal moments of rejection, but others had gone through what I would have regarded as a fairly standard procedure.

After a while it dawned on me that there is a long way to go even the best organised redundancy exercise before we really have got a process that would justify the title “Redundancy with Respect”.    A lot of the processes which I had taken for granted as self-evidently needed were causing trauma to individuals who were not given any kind of understanding about what was going on and why.  When we talked, they understood the thinking behind the decisions, but asked “Why wasn’t I told that was happening to everyone?”  “Why wasn’t I told that would happen?”   “Why did I have to find out that way?”

We are doing more harm than we know, and far more harm than we need to.  No-one likes to make anyone redundant, but that is no excuse for doing it as badly as generally we are.  If we can’t wake up to the human cost on a simple humanitarian basis and change what we do, then consider this:

All those hurt people (and their friends and family) are on social media.  Signing a compromise agreement may stop them complaining, but it won’t stop their friends and family feeling very negative about the precious brand you took years to develop.

We know that people use social media and the internet to choose fairtrade suppliers, and to monitor working conditions of workers in China.  Ask yourself what would happen if their view of your brand were to be influenced by how they saw your values as an employer?

Genuine “employee engagement” is not much helped by bolting on some bells and whistles, or special events.  It’s about the “brilliant basics” of the human touch on a day-to-day basis, and that’s never more important than when you are having a hard conversation about someone losing their job through no fault of their own.  We can, and we must, do better.

No ambushes
No surprises
No refusing to look at the person.

We are working hard to spread that word that Redundancy can be done with Respect.

If you are a boss or an HR person thinking of making someone redundant, click here to join us for this free teleseminar on Redundancy with Respect on 26 March at 12 noon or claim some free advice to get you started.

March 11th

March 11th

Click here to here our appearance on Croydon Radio on 11th March  

If you have time for a longer video, watch us on TV (video is just under an hour long)

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050                  Fax: 08452 303060
www.irenicon.co.uk
www.koffeeklatch.co.uk
www.balancingthebump.com
You can follow Annabel on Twitter

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Filed under employment law, redundancy

Talking about complexity

Update.  The new TUPE rules coming into force progressively in 2014 will make this unambiguous – this post is now out of date. 

It’s been really interesting talking to people about my blog posts around TUPE and redundancy.   A number of serious legal practitioners assert that in a TUPE scenario the current employer cannot initiate consultation regarding post-transfer redundancies since they have no intention of implementing them.

It took a while to track down where the “current employer’s intention” came into it, and as far as I can see this comes from the idea that consultation is a conversation with a view to reaching/seeking agreement (1)   — and thus if the person initiating the conversation has no intention of implementing the project, then there is no such intent and so consultation has not been started.

Any consultation process, regardless of TUPE, can be challenged if there is no intention to try to reach agreement (and thus consultation is a sham). It is possible for the current employer and future employer in a TUPE scenario to sit down jointly with the employee representatives and start consultation with a view to reaching agreement on post-transfer redundancies.

There is a view that the TUPE regulations specify that the consultees must be employees of the person consulting them. (2)   The whole of TUPE is constructed around the legal fiction that anything done by the current employer is deemed to have been done by the future employer. (3)    So at the point of transfer earlier consultations, if properly conducted will be deemed to have been done by the future employer.

If the transfer is ‘hostile’ (as changes of contractor can often be), the situation is made more difficult for the future employer because TUPE does not allow them to insist that the current employer allows early access to the transferring staff.

If the future employer’s statement of measures is simply handed to representatives by the outgoing employer (current employer), the act of distributing the paperwork does not initiate ‘consultation’, since there is no dialogue and no attempt to reach agreement.

But, provided the ’statement of measures’ is properly worded, surely the future employer can say that they have started a process of consultation with people who are not yet their staff, as they are engaging with them (albeit at second-hand) “with a view to reaching/seeking agreement”.

If the current employer is being deliberately obstructive to the future employer and will not pass on contact details for the future employer so that a direct dialogue can be established, then subtler strategies to open the lines of communication with transferring staff will have to be adopted — but they are available.

The world of law, where we argue the equivalent of how many angels can we fit on a pin, and the world of men and women, where we are much more concerned with who is going to get hurt by the pin, do not naturally coincide.

Surely it can never be a wrong thing in employment law (with the exception of announcements governed by the Official Secrets Act, or Stock Exchange rules) for parties to sit down as early as possible to discuss what is being planned and see what can be agreed. The intention of the Business Transfers Directive 2001 (4) was always to encourage consultation and dialogue, not to prevent it. It would be an unusual employment tribunal that took the view that a real dialogue could not be initiated at the earliest possible stage provided the intention is there.
—————————————————————————————————————————————————
(1)   The TUPE reg 13(6) wording is that consultation is with employee reps “with a view to seeking their agreement”. The collective redundancy wording [TULR(Consol)A 1992, s 188, is “with a view to reaching agreement with the appropriate representatives”.
(2)  TUPE reg 13(6) provides that the employer of an affected employee who envisages he will take measures shall consult reps with a view to seeking agreement to the intended measures.
Prior to the transfer, the transferring employees are NOT employees of the transferee. The transferor’s obligation is to pass on the transferee’s measures statement [TUPE reg 13(2)(d)].
(3)  TUPE reg 4(2)(b) provides that any act or omission before the transfer is completed…..shall be deemed to have been an act or omission of or in relation to the transferee……….
(4)  A consolidation of the 1977 Acquired Rights Directive and intervening amendments

See our previous  blog

Annabel Kaye is Managing Director of Irenicon Ltd a specialist employment law consultancy

Tel: 08452 303050 Fax: 08452 303060
www.irenicon.co.uk
www.koffeeklatch.co.uk
www.balancingthebump.com
You can follow Annabel on Twitter

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Measure for Measure . . . TUPE and redundancy

We must not make a scarecrow of the law,
Setting it up to fear the birds of prey,
And let it keep one shape, till custom make it
Their perch and not their terror.
(Wm Shakespeare, Measure for Measure, Act II, Sc I)

The TUPE regulations are too dynamic for the comfort of those advising their employer (or their clients), with caselaw often changing between taking on a service contract and losing it again.   This is very anxiety-provoking for most HR practitioners, since ‘getting it wrong’ can mean their employer is taking on liabilities they otherwise need not, or, worse still, on the losing end of several employment tribunal claims.

This is particularly so when a TUPE transfer involves potential headcount changes and redundancies.

The legislation on redundancy and TUPE intertwine and interleave, and it can be tricky working out who needs to be consulted about what, in what format, over what period of time, and by whom.   So let’s have a go.

Consultation TUPE consultation Redundancy consultation
Statutory obligation to inform or consult with appropriate representatives Always, no threshold of employee numbers 20 plus redundancies at one establishment within 90 days
Appropriate representatives Reps from recognised trade union; or employee reps appointed or elected by affected employees for another purpose; or specially elected/appointed employee reps Reps from recognised trade union; or employee reps appointed or elected by affected employees for another purpose; or specially elected/appointed employee reps
Statutory Timescales No defined statutory minimum period of consultation Information about transfer given to reps long enough before the transfer to enable consultation (with a view to seeking agreement) to take place on the ‘measures’ to be taken by either employer Less than 20 redundancies  – no specified timescale20+ redundancies at least 30 days before first dismissal takes effect100 +plus redundancies; 90 days Consultation ‘in good time’
Description of employees covered by the consultation Anyone who may be affected by the transfer (not just those transferring) Anyone at risk, and those who  may be affected by measures taken in connection with those dismissals
Duty to inform Inform, in writing: fact of transfer, date, reasons, implications for affected employees, measures envisaged in relation to affected employees Inform, in writing: reasons; numbers and descriptions of employees proposed to be redundant, and total number of employees of each description at the establishment; proposed method of selection, and proposed method and timing of dismissals; proposed redundancy payments; number of agency workers working for employer, where in the business, and doing what
Duty to consult With a view to seeking agreement to intended measures, considering representations, and stating reasons if proposals rejected With a view to reaching agreement, about ways of avoiding the dismissals, reducing the numbers, and mitigating the consequences
On whom duty is placed Transferor to consult; transferee to provide ‘measures’ statement Employer
Penalties Up to 13 weeks’ pay (statutory maximum not applying) Protective award up to 90 days’ pay

The Government made a call for evidence on ways to improve TUPE, which closed on 31 January 2012.  No draft legislation has been published.

TUPE caselaw is developing all the time.  Where redundancies are to take place in a TUPE scenario, then both sets of regulations and caselaw have to be considered and applied.

The redundancy consultation process and timing requirements are currently the subject of consultation which ends on 19 September  (http://www.bis.gov.uk/assets/biscore/employment-matters/docs/c/12-808-collective-redundancies-consultation.pdf).  It is proposed to shorten the consultation period for 100+ redundancy exercises.

Many of the toughest issues around TUPE, economic technical or organisational dismissals (ETOs) and collective redundancies (or finding alternatives to them) are most effectively resolved by having a good consultation process.

Having clear organisational and commercial objectives does not mean that the way of achieving these is set in stone, and there is a real difference between the aftermath of a well constructed and well consulted process, and the fall-out from a  rushed compliance exercise.

As long as the law applies to what employers can do to employees at work, there is always going to be an area of ‘grey’.  It is simply not possible to arrive at a system that is both predictable and clear and also flexible and fair (https://irenicon.wordpress.com/2011/06/10/red-tape-and-fairness/) .

If we accept this as a fact and work within it, then it becomes obvious that the way to deal with the ‘grey’ areas is to have a conversation – in other words, to consult.   If you do this in a TUPE context you will quickly discover that some people:

  • don’t want to TUPE through and would be happy to be made redundant (whether or not a genuine redundancy situation exists)
  • are not willing or able to change location/work base if that is what is needed
  • are not willing or able to learn new working methods and techniques

and by way of comparison some people

  • are keen to expand their skill base
  • are keen to change location
  • have unused skills in their current role that would be useful in a new structure
  • will do just about anything to keep a particular job

I have often sat down with HR teams and Directors who have said “X will never do this, Y will never agree to that”.  Sometimes they are right, but equally they can be wrong.  Flexibility can be as much influenced by circumstances as by personality.  We don’t know what people are keen to do until we ask them, and lay out the options for them.  Good consultation can have useful individual results, as well as improving the atmosphere at a challenging time.

For regular free teleseminars on TUPE, redundancy and more check our events page.  We are running a new seminar on how to handle the two processes simultaneously.

Click here for more about this

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060
You can follow Annabel on Twitter
www.irenicon.co.uk
www.koffeeklatch.co.uk
www.balancingthebump.com

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Filed under employment law, redundancy, TUPE

TUPE and the Big Society

Charities who are tendering to provide services that are currently provided by local authority, civil service or quangos find themselves caught in the Transfer of Undertakings (Protection of Employment)  Regulations –  TUPE  which may apply where a change of service provider is taking place.

TUPE has the effect of putting the new employer in the legal situation they would have been in if they had employed the transferring staff from the day they started with their original employer (the transferor).  Outstanding liabilities under the contract will transfer through to the new employer – anything from accrued holiday, to back pay, equal pay claims as well as unfair dismissals relating to the transfer.

Government itself has created an extra problem for charities by agreeing with unions a set of protocols that go beyond the basic legal provisions of TUPE.   For example, under TUPE there is no obligation on an employer to create a final salary pension scheme, or to honour discretionary termination payments.  But the Cabinet Office Statement of Practice concerning Staff Transfers in the Public Sector sets out “there should be appropriate arrangements to protect occupational pensions, redundancy and severance terms of staff in all these types of transfer”.  Whilst this guidance has been revoked for local authorities, it has not been revoked for all of the public sector.

There is a significant difference between the redundancy entitlements of ordinary employees and civil servants.   An ordinary worker is entitled to statutory redundancy pay at a maximum allowable weekly pay of £430 whereas the civil service redundancy scheme has no limit and even has a minimum.  Statutory redundancy is calculated on age related multipliers of a week (or a week and a half, or half week depending on the age of the worker) whereas the Civil service scheme is calculated with multipliers of months at full pay.

Whilst charities do not always pay their existing employees at the statutory basics when it comes to contractual benefits, few charities are well enough funded to have staff on the same terms as civil servants.

For example:

Statutory entitlement Typical local government/civil service
Holiday 5.6 weeks including bank holiday 6.6 weeks including bank holiday
Sick pay SSP only 6 months full pay, 6 months half pay
Redundancy Statutory only maximum allowable weekly pay £430Years of service multiplied by weeks (or 1.5 weeks or 0.5 weeks, age dependant) No maximum weekly pay (minimums apply)Years of service multiplied by months
Pensions Stakeholder/NEST Final salary

Charities who are receiving staff via TUPE transfers find themselves paying higher benefits than they normally pay, with much higher termination payments if they cannot afford to keep the staff on.  Charitable funding is often  quite short term, often project by project, or year by year at best.  Such higher benefits and termination payments can risk the viability of the Charity itself if they are not foreseen and budgeted for.

Charities who intend the service to be provided by volunteers may be able to work around the TUPE problem if their existing delivery model is long standing and pre dates the transfer.  The situation is changing, but it is still a high risk scenario for many Charities to simply ‘pitch’ to provide services that are currently provided by salaried staff.

My experience of working with social enterprises and charities and helping them plan TUPE transfers is that much of the advice they are given encourages them to take on obligations beyond the ones they are obliged to in law (or even by the government’s own standards) and leaves them very vulnerable if there are changes in funding at a later stage.   A well planned tender to outsource work needs to properly evaluate the TUPE situation and prepare for it.

See our previous blog

To be continued

Christopher Head is qualified as a barrister.  He edited Harvey on Industrial Relations and Employment Law and  a director of Irenicon Ltd a specialist employment law team.  To join the conversation about TUPE you can join our free KoffeeKlatch teleseminar on TUPE by registering via http://koffeeklatch.co.uk/category/tupe/

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TUPE or not TUPE

The TUPE regulations [the Transfer of Undertakings (Protection of Employment) Regulations 2006] cover a range of scenarios –   from mergers to ‘service provision changes’ – which occur when the work being done by an ‘organised grouping’ of employees (which can be just one person) is moved to another organisation.

A fortune has been spent on legal fees arguing about when moving a piece of work from one provider to another is a “service provision change”, and so is, or is not, covered by TUPE.   You can see in the case reports the desperation of legal advisors and HR teams who simply failed to realise early enough that the Regulations applied to their circumstances.

Whilst there have been some useful cases about what happens when the work is entirely dispersed across a wide range of organisations (no TUPE), the majority of contracting-out exercises (and  contracting-back-in,  and change-of-service-provider  exercises) are covered by the TUPE regulations and are likely to remain so for a while.

TUPE is a bit of a melting pot for HR and employment lawyers, since it is also part of the commercial contracting and purchasing (or sales) side of the organisation, and the thinking of those functions does not always incorporate what HR need to do to make the process work.

In simplistic terms, an organisation considers outsourcing when the function/individuals:

  • are too expensive to retain in house for the benefit they deliver;
  • are isolated experts on specialist subjects for whom the organisation can offer no ongoing professional development or support;
  • are  not delivering the right performance against budget;
  • where an external body has made a policy decision this should be so

Whatever the reason for deciding, the end effect of TUPE is as profound in psychological terms as it is legally.

Think about it this way.  Imagine you woke up this morning with a complete stranger beside you, only to find out that the law regarded you as having been married to each other for years.  Not only that, everything the other person did with regard to your household legal affairs is something that is binding on you.  So if your new (but in law, longstanding) partner ran up a major credit card bill before you met them, you are required to pay the bill.   That is how it is for an employer who has just TUPEd in a team.

And how about being the person transferred.  Suddenly you are ‘in bed’ with a complete stranger (or worse someone you know well and positively decided never to date, never mind marry).    You are being passed around in a crazy wife-swopping party and you didn’t ask to go to the party.

No wonder people go into denial and say – this can’t be happening to me.   But TUPE is real, and it does have this effect.    You can see why people spend a fortune litigating and saying “this can’t be applicable to me”.

To be continued …..

If you want to join our free KoffeeKlatch seminar to talk about TUPE register via http://koffeeklatch.co.uk/category/tupe/

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060 Website:  www.irenicon.co.uk
You can follow Annabel on Twitter

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Filed under benefits, contract, employment law, free stuff, pay, redundancy, TUPE

It’s the economy stupid!

Fear of employment law (which is used to sell employment law insurance) is not the same as the reality of employment law.   Tinkering with rules to alter people’s perceptions doesn’t really tackle the underlying problem of unemployment.

Changing the qualifying period of service?

The change from one to two year’s qualifying service for unfair dismissal claims   It seems  only about 1% of existing claims would have been affected by this change – not a big difference to employers.   Employees who have struggled into new or first time employment have a two-year wait for a full set of employment rights – a very big difference for them.

Is regulation causing unemployment?

The number of staff employed in US small businesses has been declining for years.  Their employment law is “dismiss when you want”.   How is employment law causing this?  There is a longer term trend a play regardless of employment laws themselves.  Similar patterns exist in the UK.

Show me the money

Late payments hit at an all time high.  If you can’t borrow from the bank or get an overdraft you can’t take on regular commitments.

This is how it works.

  • Our entrepreneur gets some new business worth £120,000 a year.  Champagne all round?  
  • Selling at narrow margins to compete –  gross profit is just 20% – or £24,000.  Beer all round?.

Entrepreneur  has to pay their own suppliers on time (or they won’t be re-supplied).  They need to take on a part-time worker as there is no slack in the existing workforce.   Brilliant – a person off the dole queue.

  • Let’s say that costs them £6,000 per year (including NI, to keep the example simple), and that they are not going to have other costs supporting this business – they can use their existing premises and overhead.
  • £18,000 trading profit on their extra turnover of £120,000 – coffee all round? 

Let’s assume their orders from the new client are evenly spaced across the year.  Let’s also assume that the big customer does not pay for 90 days (ask any small business about doing business with a big one!).

Because our client has to pay their supplier on delivery and their worker at the month end,  by the time they get paid their £10k for the month 1 shipment (in month 4), they’ve paid their supplier for four month’s shipments (4 x £8k = £32k) and the costs of 4 months of the new employee (£2k).

So, although the 4 months  profit is £6k, in cash terms they are £24k worse off (£34k total paid out to supplier and part-timer, £10k in from customer).  Tears all round?

Now, we all know the banks aren’t lending, so how do you handle it?  They can’t not pay their supplier, or they have nothing to sell to their customer.   So, at the very least, you can’t take on more staff since you have no way of paying them.

Increasingly businesses are using zero hours contracts, casual workers, and freelancers – anything to find a way to pay people ‘as an when’.  It is the logical thing to do in the circumstances.

I guess it would be too simple to get the big boys to pay up more quickly?  The late payment initiative is simply not working.  Until we fix this problem we are not going to see any real change in the unemployment figures.  

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060
Website:  www.irenicon.co.uk
You can follow Annabel on
Twitter

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Free redundancy download

We all dread redundancy

It’s not easy finding out you are ‘at risk’ of redundancy. All those legal things that seemed to be somebody else’s problems suddenly are all about you – and you can’t remember half the things you ought to.

Download our free guide to redundancy. Based on our 30 years experience it can help you start working out what you can challenge, what you can’t and what money you might expect to get.

Simple,  click here to download it

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