Every week it seems a new example of employers not following correct redundancy processes, and Foley Vs Digital River is another example of how not to carry out a redundancy.
Foley Vs Digital River
Foley was a Sales Director for US-owned Digital River, he was one of two senior UK sales people. After a round of European redundancies, Foley was assured that he and his team were immune, and he was given a retention bonus to reassure him.
It all changed a couple of months later when the other sales person declared him to be ‘at risk’ and after a series of (said the tribunal) ‘tick box’ consultation meetings, in which none of Foley’s questions were properly answered, he was dismissed.
One of those questions was ‘why me , and why was his other sales colleague not been placed at risk too. It was that colleague who carried out the redundancy consultation with Foley, an unusual (and very unwise) decision on Digital River’s part.
Good judgement continued to elude Digital River when it appointed a less senior person to hear Foley’s appeal (at which he was not offered his right to be accompanied), despite all its published policies stating that appeals should be heard by someone of greater seniority.
The court had little sympathy for Digital River’s admission that it didn’t check whether there was any national legislation it ought to have adhered to, and at the end of the process it concluded that the employer had:
“carried out a box-ticking exercise to give the illusion that it was following fair procedures required in implementing a redundancy.”
It ordered Digital River to pay £142K compensation to Mr Foley.
Unite Union Vs Fennessey/13th Note, failure to consult
Elsewhere our HR team recently reported on a Scottish tribunal decision to award the maximum possible compensation of 90 days pay for a music venue owner’s failure to follow collective consultation requirements when she closed her venue (called the 13th Note) in Glasgow.
Collective consultation requires, amongst other things, a minimum 30 day consultation period where 20+ employees are to be made redundant (45 days for 100+); statutory notification in advance of consultation; and the election of employee representatives, which again should precede the consultation.
Crucially consultations should be ‘meaningful’ and dismissal notices must not be issued until consultations have concluded and the minimum statutory time frame has elapsed.
In the Foley case, Digital River failed to achieve the ‘meaningful’ threshold, and in Mrs Fennessey’s case her failure consult was fatal to her chances in the Scottish employment tribunal.
Link to 13th Note tribunal outcome article (link will take you to myHRdept website).
‘Doing a P&O’
Big companies too are under scrutiny. We’ll all remember P&O Ferries and their brazen decision to completely disregard statutory consultation rules…but P&O mitigated their risks by signing legal settlement agreements with all of their employees, so while there was a lot of huffing and puffing by MPs, ultimately P&O escaped scott-free.
Other employers might contemplate ‘doing a P&O’, but it’s a very high risk strategy, and compensation payments will inevitably have to be substantially higher than statutory minimum redundancy pay in order to persuade employees to sign settlement agreements.
Link to P&O article (will take you to myHRdept website).
Link to P&O article 2 (will take you to myHRdept website).
Whitbread Inns
Unite the Union claim that Whitbread, which is contemplating closing 100+ less profitable restaurants from its Brewer’s Fayre and Beefeater chains & converting some restaurants to accommodation-led businesses, is failing to properly consult.
Unite say the Company knows which restaurants will be affected, but haven’t consulted the 1500 staff who will be ‘at risk’. Whitbread says it doesn’t know precisely which restaurants will be included in the proposals, which is why it’s not currently consulting with specific staff.
There’s an interesting technical argument her (that I think incidentally Unite will be on the losing end of). The law requires an employer to start consultations at the point they are considering making redundancies. Unite will say that Whitbread have passed this point already, and should be talking to those at risk.
Whitbread will say there’s no point talking to staff until they have a firm plan on which restaurants will be affected.
Have Whitbread already crossed the trigger point of contemplating redundancies? It is a fine line, arguable both ways, but my inclination is to side with Whitbread on this one. It knows it will be making reductions, but when it knows for sure which restaurants are included in the proposals, that is the point the minimum 45 day consultation should be announced to those employees to be placed at risk.
I’m guessing Unite will be planning an application for protective awards for those staff affected, and it will be interesting to see what a future tribunal decides.
HR support from JCHR
We have a lot of experience designing and managing redundancy campaigns, collective and non-collective, unionised and non-unionised.
If a client chooses, we can (and regularly do) attend and manage consultation meetings, appeal meetings etc. We will also provide all paperwork, scripts and letters to accompany the process, and advise employers on mechanisms for voluntary exits and retention arrangements if these are needed.
No employer wants to make redundancies, but sometimes it’s necessary. Our HR team at myHRdept have published a really useful plain-talking guide for employers who are considering making redundancies, and you can access the article on their dedicated HR website by clicking here.
HR and payroll services from JCHR
JCHR offer outsourced payroll and HR under one single service contract. When it comes to redundancies, its helpful for the payroll and HR teams to be in touch, as essential data can be accessed for the purposes of redundancy calculations etc. without clients having to go through the normal consent processes.
Payroll and HR outsourcing (we offer both together or individually) is normally extremely cost effective and efficient. Our clients include smaller SMEs who outsource their entire HR and payroll needs, and larger employers for whom a hybrid model involving partial outsourcing can pay enormous dividends, freeing up internal staff time for more productive matters, outsourcing payroll, employee relations matters and employment law to us.
If you’re thinking of outsourcing your HR or payroll needs, why not contact JCHR? Call us on 01635 553 299, email us at info@jCHR.uk, or contact us via our website and we’ll call you back.
