Employment Law Update (October 2008)

Is your business fit for the future?

The economic turmoil sweeping across the world is sure to have an impact on most businesses.  For some, it may mean new opportunities; for others it may mean adjusting the size of the business to meet the challenges of the future.  This is bound to affect the size and shape of the workforce, and could mean restructuring or employee redundancies, perhaps on a large scale.

The complexities of employment law mean these matters cannot be handled quickly – or if they are handled too quickly, substantial compensation may be claimed by redundant employees, on top of any redundancy payments.

The biggest headache for employers is the legal requirement to consult with employee representatives where large-scale redundancies are anticipated. If 20 or more employees are likely to be made redundant, you need to consult with union representatives or, if your business does not recognise a union, with employee representatives elected by the workforce.  The election of employee representatives itself can take several weeks, and must be completed before the period of 30 days' consultation can start.

If an employer fails to consult with the workforce before making 20 or more employees redundant, an Employment Tribunal can order the employer to pay each redundant employee up to 90 days' pay.  This amount would be in addition to any redundancy and notice payment, and any award for unfair dismissal.

Why consult the workforce?

The requirement to consult is aimed at both keeping the workforce informed of what is happening and encouraging a co-operative dialogue between managers and the workforce to explore alternative approaches which may avoid the need to make redundancies at all or reduce the numbers.

So, it is best to take a good look at your business and its future prospects as soon as possible, so that any redundancies can be handled in a planned and structured way, and there is ample time to consult the workforce if necessary.

Seek advice early

Mentor Employment Law Consultants are available 24/7 to help with advice on restructuring and redundancies.  Alternatively, if you feel you need more hands-on help, speak to your Employment Law Consultant about how we can design a package of consultancy services tailored to your requirements.