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“Can’t I just say they’re redundant?”

06 Feb 2019

An employer phones to ask how they can terminate the employment of a poor performing employee with more than two years’ service. We explain that it is essential  to go through a disciplinary procedure. If not, the dismissal will be unfair.

So, we then take the employer through a  disciplinary procedure which involves setting out in writing the allegations with any supporting documents, requiring the employee’s attendance at a disciplinary meeting at which they have the right to be accompanied, allowing them an opportunity to respond to the allegations and then deciding on the appropriate sanction ranging from a written warning, second written warning, final written warning to ultimately termination.  Depending on the circumstances, other sanctions might be demotion,  transfer to another department, loss of seniority or loss of future bonus.  Following the imposition of a sanction, the employee has the right to appeal to someone more senior in the organisation who has not been involved in the original decision. 

If the original sanction is a written warning, we calculate with the employer the likely timeframe before the position of lawfully terminating employment can be reached if the employee continues to underperform. This can be upwards of six months and also involves considerable management time.  We also factor into our advice that, in a number of cases, there is an initial spurt of improved performance for, say, three months before the employee falls back into their old ways. There is also the possibility of the process being delayed if the employee goes on sickness absence because of stress.  It is therefore possible that a complete process ending in termination can take over 12 months and throughout that period, the employee is demotivated and the work colleagues and line manager are frustrated.  

The alternative is to have what is called a “protected conversation” which, in broad terms, allows an employer to have an “off the record” conversation with a poor performing employee.  The conversation is initiated by the employer along the lines of “We both know that there are issues regarding your performance and we could go through a formal disciplinary procedure which could well end up with written warnings being put on to your personnel file.  An alternative is that we agree that your employment be terminated on payment of a severance package.”  If a severance package is agreed and a settlement agreement is completed, the employment is terminated and the severance payment made.

The advantage of this approach is that the conversation is that, if an agreement cannot be reached, the employee cannot later refer to the conversation and claim that any subsequent disciplinary process was biased and pre-determined. 

The difficulty with this approach is that the employee may not agree that they have performed poorly, is outraged at the suggestion and completely rejects the severance payment being offered which then means that the employer is in a weak negotiating position. Another difficulty is that the employer is effectively rewarding poor performance which can be demotivating to the other hard working and loyal employees. 

Based on the above advice, it is understandable that the employer then says “so why can’t we make them redundant?

In common parlance, the term “redundancy” has morphed into a general description for the termination of employment but under employment law, it has a very specific meaning.  Redundancy is used to describe a situation in which an employer decides to reduce the number of its employees, either within the business as a whole, or within a particular site, business unit, function or job role. A potential redundancy situation has got to be genuine.  If it becomes clear after two or three well aimed questions that the real reason for termination was poor performance or misconduct, the employer is “bang to rights” and fights any Employment Tribunal claim with not one hand but two hands tied behind their back. 

Some years ago, a CEO described to me detailed changes that he wanted to make to the company’s organisational chart which would result in no longer requiring the position of Sales Director.  When I asked what the purpose of removing this role was, the CEO said that the current Sales Director was an alcoholic and, rather than confront him with this problem, they would prefer to approach a termination of employment with a warmer, fuzzier word of “redundancy.”  We explained that this would actually have the opposite effect. The Sales Director would immediately realise that the proposed changes were artificial and would be outraged at the injustice of the proposal.  Rather than thinking they were being kind by pursuing an artificial redundancy, the company would probably make matters far worse.  Better, we said, that you sit down with the Sales Director, point out that his drinking problem was causing difficulties and support attempts to fight the addiction.

Once the employer has established that there is, in principle, a genuine potential redundancy situation, a fair procedure which can take up around two weeks involves;

  • identifying any selection pool and determining selection criteria,
  • a formal consultation meeting,
  • discussing about whether there is any suitable alternative employment that can be offered,
  • considering whether there are employees leaving and if so, whether the employee at risk of redundancy could fill any of those roles,
  • a right of appeal in the event that a redundancy decision has been made

We advise employers that all their communications with the work force must be genuine. Asserting that a position is redundant when the duties still need to be performed results in a loss of trust and confidence towards management. That can have a detrimental effect on morale and productivity. 

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