Following recent controversies such as the P&O Ferries affair earlier this year, and amidst increasing economic pressures and the Bank of England’s warning last week that we are facing the longest recession since records began, the news of significant layoffs at Twitter has brought a further round of public scrutiny to large-scale redundancies, says Jo Keddie.
There has been widespread coverage of actions taken towards Twitter employees in the US with lawsuits being threatened. That being so, UK employment rights are generally stronger and whether legal action will follow in the next few weeks will very much depend on how Twitter behaves towards its affected employees after its actions taken to date.
The impact of sudden and widespread threatened redundancies and the abrupt removal from access to systems and workplaces has been huge for the employees affected, both financially and emotionally. Not only has it generated significant distress and concern amongst those impacted but it has also garnered far wider criticism from the wider business community and in the media.
This serves to emphasise the need to make very carefully considered plans when businesses feel that they have no option but to make cuts. From experience not only do the steps that need to be taken have to be legally compliant but the implementation should be handled with as much sensitivity, clarity and advance notice as possible. Appropriate HR and other support for those affected is also essential since employees’ resilience is much lower as a consequence of the recent pandemic.
Fair reason? Fair process?
Redundancy is one of the potentially fair reasons for dismissal. However, the term does have a specific legal meaning and is not merely a byword for cost-cutting. Under the Employment Rights Act 1996, redundancy arises where the need for the employee to carry out work of a particular kind and in a particular place has diminished or ceased entirely.
Some employers attempt to disguise or contrive other reasons for removing employees into a redundancy removal. For example, it can be seen as a cheaper, quicker and often less risky way of dismissing an underperforming employee when compared with implementing and conducting a performance management plan which often spans several months and involves a fair amount of management time. In the case of mass redundancies, it is even more important for there to be a clear and justifiable business justification for each area of the business affected, along with evidence supporting the decision-making process that has resulted in determining how many employees are in scope for redundancy and how many redundancies actually need to be made.
It is also vital for employers to follow a fair process when implementing the removal of a substantial number of employees on the basis of redundancy. Failing to do so can be costly both reputationally and in monetary terms. UK employment law sets out clear obligations on all employers dealing with redundancy situations and affords a high degree of protection to employees, especially in situations where 20 or more employees are being dismissed.
While it can be difficult for dismissed employees to resist financial or other supportable business arguments as to why their roles may no longer be needed, a fair collective and individual process is equally important since flaws in that process are often easy to identify.
Irrespective of the number of employees being made redundant, each employee with the relevant length of service who is “at risk” of redundancy should be consulted with individually. In practical terms, this means discussing the situation that has arisen, considering ways in which their redundancy maybe avoided and investigating any potential alternatives. Best practice advocates holding at least one consultation meeting with each affected employee. Although there is no statutory obligation to allow a companion to accompany and support an employee to a consultation meeting, allowing this is helpful when considering the upshot of the process may well be dismissal.
How employers handle this part of the process will be scrutinised by the Employment Tribunal in any subsequent unfair dismissal claim. It is therefore important for employers to be as fair and accommodating as possible when conducting the process and documenting the steps taken to achieve this. That does not require inventing alternative roles or agreeing to proposals which are not workable but, equally, proposed alternatives should not be dismissed out of hand. This includes considering part-time working and job-sharing which, in practice, may address some issues.
Speaking with the group (too)
Collective consultation – as is beginning to take place at Twitter – is relevant where 20 or more employees are potentially being made redundant at a single establishment. It is important to note that there is not an ‘either-or’ choice between individual and collective consultation – collective consultation imposes heightened obligations on employers in addition to their obligation to individually consult with affected employees afterwards.
Collective consultation is a required period of engagement with employees to explore how employees in scope will be selected for redundancy, what the individual process will look like and what, if any, terms are being proposed to departing employees.
The key difference from individual consultation is that, rather than engaging with all employees directly, trade union representatives or employee representatives are elected from the workforce. They act as a conduit to ensure that employees are being fully informed and consulted with. In theory, this should be an effective way of disseminating information and taking views from large groups. In practice, however, how meaningful the process is depends very much on the quality of information being discussed and the willingness of the employer to engage.
Once collective consultation starts, the Secretary of State for Business, Energy and Industrial Strategy must be informed and provided with certain key information. Proceeding to dismiss staff without having done so is extremely risky and potentially a criminal matter.
Where collective consultation is engaged and representatives have been identified, a minimum period starts and none of the affected individuals’ employment can be terminated until that point (although notice may be given earlier). Where 20 to 99 employees are affected, the minimum period is 30 days. Where the number of employees being made redundant is greater than 100, the consultation period increases from 30 days to 45 days.
Getting it wrong
Failing to consult with employees for the required duration or failing to notify BEIS can give rise to hefty penalties, and also result in having to pay out 90 days’ gross pay for each affected employee. Across a workforce as sizeable as Twitter’s, for example, the possible liabilities can quickly become very substantial.
Furthermore, whether or not collective consultation is carried out correctly, employees may also have unfair dismissal claims, either because they are not genuinely redundant or individual consultation has not been carried out properly. In addition to statutory redundancy pay (or a ‘basic award’), employees who successfully establish unfair dismissal claims could be entitled to up to £93,878.
In addition to those general risks when dismissing large numbers of employees, amongst any bigger cohort of staff there are likely to be individual employees who may well have protected characteristics or may have whistleblown. Consequently, objective and transparent criteria need to be applied when selecting individual employees for redundancy and individual circumstances always need to be considered carefully, since damages can be capped for successful discrimination or whistleblowing claims.
Twitter: where next?
The situation at Twitter has led to many feeling shocked, unvalued and distressed by the swift and unfeeling way in which the situation has been handled, with those unlucky employees selected being removed from company’s systems without notice. Not only has that caused understandable concern, but it has cast into doubt how a meaningful consultation can now take place.
While that is an issue of legal risk which will no doubt play out over the coming weeks and months, there is a significant human element which should not be forgotten. It should always be in mind whenever any individual is dismissed, but it is particularly evident when, as here, large numbers of talented, dedicated and high-performing employees face being without a job at such a difficult time with recession affecting all sectors.
Jo Keddie is the Senior Partner and Head of Employment at Winckworth Sherwood.