With new figures showing how a record number of employers notified the government last year of plans for large-scale redundancies, Nigel Brockley, an employment barrister at No5 Barristers’ Chambers, has outlined the key legal risks employers need to be aware of.
Nigel said: “Redundancy is, on the face of it, a fair and legitimate reason for dismissal. However, the proper procedures need to be followed and there are various areas of risk for employers, with employees and unions being likely to make tribunal claims where they perceive those procedures have not been followed properly.”
He commented after figures were published by the Office for National Statistics showing that 278,149 planned redundancies were reported to the government in 2023, up 58% on the 176,149 reported in 2022. Employers planning to make 20 or more employees redundant must report their intentions to the government.
Employers must also undertake a formal consultation exercise when making more than 20 positions redundant. Generally speaking, they must identify a pool of employees whose positions are being made redundant, before performing the exercise of scoring employees by reference to a series of factors i.e. attendance record in order to identify who, within the pool, should be made redundant. Following the correct procedures in this process is crucial, according to Nigel.
He said: “The biggest risk to employers is where an employee is able to make a tribunal claim for discrimination based on a protected characteristic as set out in the Equality Act 2010. In these circumstances, tribunal hearings tend to be three or more days rather than one, and that attracts significantly higher legal costs.
“This tends to come about in circumstances such as where sickness absences are used in scoring employees from the pool and an employee is able to demonstrate that those absences arose from a condition that constitutes a disability.”
However, the risks are not confined to circumstances where protected characteristics are involved. The use of subjective criteria to score employees in a pool can be problematic too.
“There is certainly room for subjective judgment in scoring employees,” said Nigel, “but subjective measures should be used sparingly and only where necessary. Considering factors like how well employees get on with others is problematic because the views of management can be very different from the views of other employees.
“Subjective measures are much more likely to lead to challenges in the employment tribunal in my experience.”
Ultimately, employers should seek legal advice as soon as they have identified the need to make redundancies in order to ensure the consultation process is both compliant and meaningful. Then, should tribunal claims be brought, they should again seek advice at the earliest opportunity.
