LEGALINK CROSS-BORDER LAYOFFS QUESTIONNAIRE

There is a duty on the employer to inform and consult.  In terms of the dismissal of a group of employees in a redundancy situation, where the employer proposes to dismiss 20 or more employees at the same establishment within a 90 day period, the employer must consult with representatives of affected employees for a minimum period.  This period is 30 days where the number of employees is between 20 and 99, and 90 days for 100 or more employees. This is called collective consultation and is governed by the Trade Union and Labour Relations (Consolidation) Act 1992.  If the duty to collectively consult applies then the employer must also notify the Secretary of State, giving information about the reasons for the redundancies, the numbers involved and the process to be followed.  (1)

Employees must be allowed to work or be paid for their notice periods. In addition, employees with more than two years' service are entitled to a statutory redundancy payment calculated with reference to length of service, age and weekly pay (subject to a cap).

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(1)  It should be noted that the term “laid off” has a particular meaning under UK employment law, which is not the same as redundancy. An employee can only be laid off lawfully if the terms of his contract, whether implied or express, afford the employer the right to do so.  Only employees whose remuneration depends on being given work to do can be “laid-off”.   This is a temporary measure, with the expectation that a return to the normal working pattern will resume.  Employees who have been laid-off are given the protection of being able to claim a statutory redundancy payment on the basis that they have in effect been dismissed by way of redundancy, rather than temporarily laid off.  In order to claim the employee must have two years length of service and have been laid-off for the required length of time as specified by the ERA.  The employee must serve the employer with a notice of intention to claim.  An employer can serve a counter-notice to contest the claim, citing the fact that there is a reasonable expectation of a return to normal working hours, and that therefore there is no dismissal (by reason of “redundancy”).

An employer who has failed to collectively consult on redundancies when ordered to do so may be ordered by an Employment Tribunal to pay a so-called “protective award” of up to 90 days’ pay for each affected employee.  A failure to notify the Secretary of State may lead to the Secretary of State instituting legal proceedings which could lead to a summary conviction and a fine up to £5000.  This upper limit is subject to review from time to time.

An employer must ensure that where employees are being terminated by reason of redundancy, that they have followed a fair procedure and have consulted properly in order to avoid claims for unfair dismissal.  If not, an employee may claim he has been unfairly dismissed, subject to the individual having one year’s continuous service (but see below).  In order for a dismissal to be fair, it must be for a potentially fair reason (this includes redundancy, i.e. a business closure or a reduction in the need for employees to carry out certain work).  In assessing whether a dismissal was fair, an employment tribunal will normally apply a general test of fairness set out in the ERA. The employer must also show that it acted reasonably in dismissing the employee for that reason. In a redundancy situation this includes carrying out fair selection, consulting with the employee and considering alternative employment.  There are certain circumstances where a dismissal will be automatically unfair and in these situations there is no qualifying period of employment necessary and there is no cap on the amount that may be awarded.

If an employment tribunal finds that a dismissal is unfair, the employee will be entitled to an unfair dismissal award made up of a basic award subject to a cap (currently £10,500) and a compensatory award, (largely) based on compensating the employee for as much as an employment tribunal thinks is just and equitable to award in all the circumstances, having regard to the financial loss suffered by the employee as a result of the dismissal and the employers actions.  The award is also subject to a cap (currently £66,200).

A tribunal can also order reinstatement of an employee (as if the employee has never been dismissed) or re-engagement (on terms as favourable or in suitable alternative employment).  It is suffice to say this is not common.  In the event either is ordered and the employer does not comply with the order, an additional unfair dismissal award can be made of between 26 weeks minimum and 52 weeks maximum pay.  A weeks pay is subject to a cap giving an employee a possible £9,100-£18,200 payment.

Lastly, an employee who is found to have been discriminated against or who has been dismissed for being a whistleblower will be entitled to damages, also based on financial loss but uncapped, together with an award for injury to feelings.  There is no qualifying service needed.