The risks you take with redundancy

ACCORDING to Times Online (April 7), many employers are failing to follow redundancy procedures and have opened themselves up to the risk of expensive claims for compensation.

This information has come from a number of employment solicitors who have seen numerous potential claims.

More than a quarter of a million people were made redundant in the three months to January and given that the recession is still with us, we can expect to see more over the coming months.

For organisations which are genuinely having to make redundancies to survive the recession, they are playing a dangerous game if they don't follow the correct procedures.

Where an employer is considering 20 or more redundancies, then the procedures are clearly defined.

These employers must enter into what is known as a 'collective consultation' period before any notices for redundancy are given. There are two periods – for 20 employees or more but under 100 employees then the 'collective consultation' period is a minimum of 30 days – for 100 employees or more then the collective consultation period is a minimum of 90 days. Under 'collective consultation' employees must be allowed representation from either a trade union or, where there is no union, to appoint their own representative.

Collective redundancy will still apply even where employees request voluntary redundancy as it is the overall number that counts.

For those employers considering less than 20 redundancies, then the collective consultation does not apply, but the employer still has a duty to consult and to follow fair procedures. If an employer started a redundancy process for less than 20 employees prior to April 6, 2009, then those employers also have to comply with the statutory dismissal procedures.

It is one of the hardest challenges that an employer will face, but to blatantly ignore employment legislation is economically suicidal. Rather than make sufficient savings to protect the business (especially for the smaller employer), if just one case is successfully won in an Employment Tribunal, it could prove sufficiently crippling and bring the business to its knees.

In addition to a claim for unfair dismissal where the maximum award could be as much as £66,200 (average awards tend to be in the region of £10,000), failure to follow procedures can also lead to awards for up to 13 weeks' actual pay.

Add to this your solicitor's fees to defend a claim and the cost of your valuable time when you should be focusing on protecting your business and it all adds up to a worrying sum.

Last year saw a 43% increase in the number of employment tribunal claims brought; a record high! These figures indicate that employers should not rely on a misinformed belief that just because we are in a recession does not mean that once the shock of redundancy has worn off, their employees won't reflect on their situation and possibly even take action.

Tip of the week:

Always follow the procedures when undertaking a major exercise such as redundancy, be meticulous in keeping a good document trail and if you are unsure what to do – ask for expert HR advice.