A Redundancy Situation
Part 1
It’s a sunny day and Bill is happily working away for his employer when, out of the blue, his manager calls him into her office and says “look Bill, I’m not sure this is the job for you, the company isn’t doing very well, you are a luxury we can’t really afford any more. I saw this job advertised and I felt I had to talk to you”. Bill’s manager then hands him a job advert and brings the meeting to an end. Sounds unlikely? Well it happened last month.
Poor Bill has been knocked sideways and doesn’t know what to do or what his options are. So what are they? He has been employed for more than a year and so is protected from being unfairly dismissed.
Should he walk out and claim constructive dismissal? The answer is no, even though he probably has a good claim, he will be unemployed with no income, and compensation from an employment tribunal a few months in the future will not help him pay this month’s mortgage and car loan.
Should he rant and rave, tell his manager what he thinks of her? Tempting and although it may bring some short term satisfaction, not a good idea because it could lead to his fair dismissal.
Should he go sick? Again tempting but just as sticking your head in the sand is rarely a good idea, it does not provide any kind of solution.
Should he raise a grievance about the way he has been treated? This may become necessary but is not a good initial response. Formal grievances can lead to crystallisation of positions and less than open discussions.
So what should Bill do? What he should do depends on what his boss is really thinking and so far Bill has a very confused message. Is she complaining about his work or is the company faced with a redundancy situation or was she just having a bad day?
So the advice to Bill is calm down and do nothing today but speak to your boss tomorrow and ask her if she can help you understand what she actually meant yesterday. Don’t be confrontational or too defensive but simply ask her what she is worried about.
Part 2 – what did she say?
Bill’s boss gave him a very confused message which could have been either “you are not very good at your job so leave” or “your job may be redundant because the company is not doing very well” or “I’m having a bad day and so will be mean to you to make me feel better”.
Bill did not overreact although he was tempted to.
Having taken advice, he spoke to his manager the following day and asked her nicely to explain what she had said. These are her words:
“Bill, I am sorry but the company really is not doing very well and I am worried. I think that we have mismanaged ourselves and the bank are involved. We will probably have to make you redundant. We won’t make any decision until the end of next month.”
So Bill now knows that his job is under threat but that his own performance is not the issue.
What should he do now?
At the end of the day, Bill has to decide whether he still wants to work for the company or not. If he is happy to take redundancy and take his chances on the job market with a pay off in his pocket, his approach will be completely different than if he really wants to fight for his job.
For now, let’s assume that Bill wouldn’t mind leaving. The first thing to do is find out how much he will get. There are potentially four elements to a pay off. Firstly, the statutory redundancy payment. This is currently one week’s pay capped at £310 per week for each complete year of service between the ages of 22 and 41 and one and a half weeks’ pay for each complete year of service over the age of 41. Secondly, there is the question – will the company pay Bill an enhanced redundancy payment? If there is no contractual right to a higher payment will they make one anyway? Thirdly, will Bill be expected to work out his notice or will they let him go early and pay him his notice pay anyway? Fourthly, and this should not be ignored, is the question of accrued holiday pay .
How can Bill get the most out of the company? Primarily, it depends on how badly off the company is, but that is outside his control. What is within his control is how he handles himself. If he makes it clear that he does not want to go but understands the situation and is generally helpful and nice to his manager (making what is a difficult job for her easier) with an underlying threat of an unfair dismissal claim, then Bill is likely to get more than if he throws his weight around, is openly critical of his manager and makes too many open threats of legal action.
Finally, the fact that Bill’s manager broke the news to him informally without putting it in writing means that the company is likely to have breached the relevant statutory procedures. This means that any subsequent dismissal may be automatically unfair and should strengthen Bill’s bargaining position.
Part 3 - What if Bill wants to stay?
Bill has been told in a totally unprofessional way that due to the company’s poor financial performance he may be made redundant.
Bill decided not to overreact to his bad treatment (which is never easy but is always the best approach) and also decided that he does not want a pay off, mainly because the company were only prepared to offer him the statutory minimum. So Bill is going to fight his corner.
The company has 72 employees and Bill is one of five Web Developers.
Bill is the longest serving Web Developer and is in his forties. The other four are younger than him. No-one else has been told that they are at risk of redundancy. Bill suspects that his manager spoke to him because he is the highest paid of the Developers.
The law is probably a good starting point from which to analyse Bill’s predicament.
The company apparently need to reduce their number of Designers from five to four. They cannot arbitrarily pick one out. They have to decide which job is redundant by reference to objective non-discriminatory criteria. “Last in, first out” used to be a common redundancy criteria, however, following the introduction of age discrimination, this is a more risky approach . The danger is that someone with less service may in practice be younger than employees who have been with the company longer. Bill is not aware of any criteria being applied and no one else has been told that their job might be redundant.
Bill should raise a grievance in these terms:
“I feel I have no choice but to raise a formal grievance in accordance with the company’s grievance procedure. With no prior warning or consultation, I have been told that I may be dismissed because I am redundant. I can only assume that this decision is because I am older than my colleagues who are also Web Designers, none of whom have been told that there is a redundancy issue. This, if it is true, is unlawful age discrimination. In any event I believe I have been unfairly treated. I look forward to hearing from you.”
Part 4 - What next for Bill?
This is the last episode in Bill’s saga. One of five Web Designers, Bill was told by his manager that he might be made redundant. None of the other Web Designers were “threatened” in the same way and Bill suspects that his age is the reason.
Bill raises a grievance complaining about the way he has been treated. The company now have a dilemma which is, how to deal with the grievance.
They have a number of options:
1. Ignore it.
2. Deal with it badly.
3. Deal with it properly.
Options one and two are easily done but will leave the company at risk of being on the wrong end of successful unfair dismissal and age discrimination claims. Particularly, as there is no limit on how much compensation can be awarded to Bill if the Tribunal believe that he has been the victim of age discrimination, option 3 is the sensible way to proceed.
In a nutshell, option three involves organising a meeting with Bill to discuss his grievance. The outcome of that should be an apology for the behaviour of Bill’s manager who spoke to Bill out of turn followed by confirmation that one job has to be lost by reason of redundancy and that all the Web Designers will be considered before a selection is made.
The position in relation to the redundancy situation needs to be explained to all the Designers and they must be told how the selection will be made. The decision needs as far as possible, to be based on objective criteria such as attendance record, disciplinary record, experience and capability.
The irony is that by being prepared to apologise to Bill for the behaviour of his manager, the company are in a better position to fairly select his position for redundancy. The fact is that Bill is the weakest member of the department, irrespective of his age.
In the real Bill story, the company were not prepared to apologise. They pretended that Bill had been fairly dealt with and so it cost them far more money and time in dealing with his claim and in compensation than it should have done.
The lesson for employers; if you have made a mistake admit it and move on. The lesson for employees; think as logically as you can and when the time is right to raise a grievance, do it.
Published 08/05/2007.
