How redundancy can be anything but plain sailing

Shipping company P&O Ferries’ instant dismissal of 800 staff members last week has been branded "one of the most shameful acts in the history of British industrial relations".

The company was shown in a Zoom call telling workers that their employment was terminated with immediate effect on the grounds of redundancy. It sparked widespread media coverage, with some staff reportedly refusing to leave their ships. And it has once again brought into sharp focus the commercial, legal and PR complexities involved in business restructures. The Government is reported to have written to P&O about the legality of their actions and their failure to consult about the redundancies which may also mean P&O  have committed criminal offences in addition to any liability they may have under civil employment law.

Redundancy is a legitimate way of reducing business costs. In some situations it’s the only way of keeping a company going. But, as well as being sure there is a proper basis for making redundancies, a business usually needs to carefully plan and carry through a meticulous process – a large part of which is consultation with affected employees. This includes explaining the situation and exploring alternatives long before deciding to dismiss. Where there’s a large-scale redundancy (20 or more), there is a legal requirement to collectively consult with a trade union or elected employee representative. That collective consultation must last at least 30 days where between 20 and 99 redundancies within a 90-day period are proposed. Where there are more than 100 proposed redundancies, that timeframe is extended to 45 days. Only after those periods have elapsed (and all alternatives to redundancy have been properly explored) should an employer look to dismiss.

Employers that get part of the process, or the basis for make someone redundant, face legal liability. Unfair dismissal and discrimination claims are two significant risks. And where there has been a failure to collectively consult, there’s additional liability of up to 90 days’ full pay for each affected employee. Criminal consequences are also possible where an organisation that proposes making 20 or more employees redundant fails to notify the Secretary of State in advance.

With the stakes high for workers who stand to lose their livelihood, it makes sense that the law on redundancy places a significant burden on employers to be fair and thorough. Planning is a key element of this. Good communication is another. And being ready to treat redundancy as a process and not a foregone conclusion is also vital to achieving the right outcome.

For advice about business restructuring, or any element of redundancy, please contact us on 01264 353411 or at info@bsandi.co.uk.