Redundancy Procedure after 6 April 2009

Statutory dismissal procedures were abolished from 6 April 2009, and the new ACAS Code of Practice does not apply to redundancies.

What process should you follow to ensure a fair redundancy procedure under the new regime?

Transitional arrangements continue to apply the statutory dismissal procedures if the employer has issued a step 1 letter or held a step 2 meeting on or before 5 April 2009.

Otherwise we return to the good old days of pre-2004 when dismissals are genuinely for redundancy and where fairness will again be governed by the principles established by case law.

The Consequences

Generally, a redundancy dismissal will be unfair unless the employer:

• adopts a fair basis for selection. It must identify the correct pool from which to select potentially redundant employees, and apply appropriate selection criteria fairly and objectively;
• warned and consult fully with employees, or their representatives about their proposed redundancy. Consultation must be at a formative stage, and employees must be given the chance to respond to the reasons for redundancies, the pools, the criteria and their scores where they are to be selected from a pool, suitable alternative roles, and other ways of avoiding or mitigating the effects of the redundancy. The employer must keep an open mind about the matters under consultation and conscientiously consider the employees' responses;
• consider suitable alternative roles in the group and other ways in which redundancy may be avoided;
• allow employees to be accompanied at consultation meetings; and
• offered redundant employees the right to appeal the decision to make them redundant.

Employers should also ensure that they follow any company redundancy procedure or policy. Where there are 20 or more proposed redundancies at any establishment within a 90 day period, the employer also needs to consider steps for collective consultation and its obligation to notify BIS (the new Government Department for Business, Innovation and Skills formed from BERR and DIUS); these statutory requirements remain unchanged.

ACAS has now updated its guidance booklet on Redundancy Handling dealing with both the statutory requirements for collective consultation and best practice for collective and individual consultation (http://www.acas.org.uk/CHttpHandler.ashx?id=877&p=0.)

Other than the removal of the references to the statutory dismissal procedures, the guidance remains largely unchanged, and the procedure to be followed under the new regime is very similar to that followed pre-6 April 2009 i.e. for individual consultation, a warning letter, followed by consultation meeting(s), a decision letter, and an appeal process if appropriate.

The Government have just announced the cost of redundancies will also rise. From 1 October 2009 the limit of a week's pay for calculating statutory redundancy pay will increase from £350 to £380 (thus increasing the maximum payment from £10,500 to £11,400).

What Do You Need To Do?

• Update any redundancy policies, which may still refer to or be based on the statutory procedures and may therefore be overly prescriptive and inflexible.
• Familiarise yourself with ACAS' guidance on redundancy handling and ensure that general principles of fairness are followed in any redundancy dismissals.
• Employers no longer risk an automatic unfair dismissal for failing to follow a statutory procedure, but do risk ordinary unfair dismissal claims if the process is shown to be unfair or unreasonable. This is a question of fact in each case but the key is to warn and consult, adopt a fair basis for selection and consider any alternatives to dismissal.
• Factor in the increase in statutory redundancy payments (or enhanced payments based on the SRP) based on a maximum weekly pay of £380 from 1 October 2009.