Charities preparing for redundancies

The coronavirus pandemic has affected many charities very significantly and, in some cases, threatened their viability. Charities have had to manage their resources and staffing levels from a perspective of ensuring financial stability and survival.

The end of furlough

When lockdown measures were introduced in March 2020, organisations nationwide were forced to make immediate changes to their ways of working. The CJRS was set up as part of a package of measures designed to safeguard jobs and alleviate the impact of the coronavirus pandemic on employers across the country.

Many charities have had to furlough employees under the CJRS, and it has provided a lifeline to them when they might otherwise have had to cut staff numbers drastically. Now is the time, however, for charities with employees on furlough to look ahead, consider what staffing levels they will need once the CJRS closes and decide whether redundancies might be necessary.

What is redundancy?

Under section 139 of the Employment Rights Act 1996, a redundancy situation is one where an employer closes down its business altogether, closes one particular workplace or has a reduced requirement for employees to undertake work of a particular kind.

Legal requirements

While redundancy is a potentially fair reason for an employer to dismiss an employee, in the context of an unfair dismissal claim (which employees with two years’ or more continuous service have the right bring), an employment tribunal will decide whether the employer’s decision to dismiss for that reason fell within the “band of reasonable responses” of a reasonable employer in those circumstances. Failure to follow a fair process will normally make a dismissal unfair.

In the context of redundancy, a fair dismissal will usually involve:

• Warning and consulting employees.
• Adopting a fair basis for selecting employees for redundancy.
• Considering alternative employment.
• Giving employees the opportunity to appeal.

It is vital for a charity employer to ascertain at any early stage how many employees it may need to make redundant. The number of employees is crucial because of the strict statutory duty to inform and consult collectively, which arises when an employer is proposing to dismiss for redundancy 20 or more employees at one establishment within a period of 90 days or less.

Considering the alternatives

Charity employers should consider ways of avoiding the need to make employees redundant altogether, for example:

• Restricting new recruitment.
• Voluntary redundancy – this can be a good option for charities as it offers them the chance to help protect staff who are more dependent on their job. Employers should, however, balance this with the risk that seeking volunteers could mean losing their top performers (unless they make it clear that applications for voluntary redundancy will be considered but are not guaranteed).
• Retraining and/or transferring affected employees to other work.
• Moving affected employees to another workplace.
• Cost-saving measures such as: short-time working and job sharing; reducing overtime; wage/salary cuts; limiting/removing discretionary benefits; unpaid leave/sabbaticals.

The consultation process

Charities should consult properly with those at risk of redundancy (and “appropriate representatives” where the collective consultation obligations mentioned above apply) before reaching a final decision.

What amounts to a reasonable and appropriate consultation process will vary somewhat according to the situation. In general, however, consultations should involve:

• Holding meetings with employees to discuss the situation in detail.
• Speaking to employees when redundancy proposals are still at a formative stage.
• Giving employees adequate information on which to respond.
• Giving employees adequate time in which to respond to the information.
• Conscientious consideration of proposals/ideas put forward by employees.

Following a careful and well planned redundancy consultation process should help to minimise the risk of legal claims against the charity (e.g. for unfair dismissal, breach of contract or discrimination) and maintain good relations with all staff whether they are selected for redundancy or not, hopefully minimising any adverse impact on the charity.

At the end of the consultation period, the charity will need to confirm who (if anyone) it is making redundant and whether an alternative to redundancy for certain roles has been found.

In cases involving collective consultation obligations, redundancy dismissals cannot take effect under after set statutory time periods have elapsed (30 days where the employer is proposing to dismiss 20 or more, but fewer than 100, employees).

Once a particular role has been confirmed as redundant, the charity should consider whether there are any other vacant roles within the organisation that the employee could be considered for. It is important that employers do not make any assumptions about what roles an employee faced with redundancy might be interested in and should provide details of all vacancies for the employee to consider.

Communication is key

Throughout any redundancy process, it is absolutely crucial for charities to keep in regular contact with all members of staff; both those who are at risk of redundancy and those who are not (but who may, nevertheless, be unsettled by the situation). This can be as simple as regular meetings (virtual meetings are fine in the current climate) or telephone calls.

Redundancy pay

In order for an employee to be entitled to a statutory redundancy payment, they will need to have been continuously employed for a period of two years or more.

A statutory redundancy payment is calculated as follows:

• 1½ weeks' pay for each complete year of employment in which the employee was not below the age of 41.
• 1 week's pay for each complete year of employment between the ages of 22 and 40 inclusive.
• ½ a week's pay for each complete year of employment in which the employee was under the age of 22.

A week's pay is capped by statute at £544 and a maximum of 20 years of employment are taken into account for each employee.

Employees who are redundant will also be entitled to notice pay (whether they work their notice periods or receive payment in lieu of notice) and payment in lieu of any accrued but untaken holiday when their employment ends.

Employee rights

Any employee on maternity leave or shared parental leave whose job is made redundant has the right to be offered any suitable alternative vacancy first. Otherwise, if an employer has more than one other potentially redundant employee interested in an alternative role, it can undertake a competitive interview process to decide to whom to offer the role.

Employees who do not feel that they are being treated fairly or legally should be given the opportunity to raise any objections or counter arguments during the consultation process or at any meetings. They should also be allowed a right of appeal against any decision to make them redundant.

Where an employee wants to bring an employment tribunal claim against their employer (or former employer) arising out of a redundancy process (e.g. an unfair dismissal claim where the employee has two years’ or more continuous employment), they will need to make an early conciliation notification to ACAS, the independent government body that deals with employment disputes.

Looking ahead

Sadly, it is likely that the next few months will see an increase in charities being forced to make redundancies, particularly as the CJRS comes to a close. By preparing early, however, charities across the country will be able to do the best they can - not just for their own futures but for those of their employees too.

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