Is Staff Dismissal The Only Option For Struggling Businesses?
More than 300 staff lost their jobs after bus company, GHA Coaches, went into administration last week. The workers were apparently shocked at the news with some reportedly having only been
hired the day before, and found out they had lost their jobs via text message.
employment law consultant with ELAS says while redundancy is inevitable in some circumstances, there are other options available to employers in order to try and avoid it. These include both long term and short term options. Short term options Lay-off: Temporary lay-off without pay is a good short term solution in some cases e.g. a manufacturer loses a contract and has no work to provide. If they feel that they are likely to secure another contract in the next couple of weeks then they could lay off the staff instead of making them redundant. The disadvantage to this is that it can only be done without pay if the contract of employment so provides. No clause = full pay! Employees are entitled to £26.00 a day for the first 5 days, thereafter unpaid. If they are laid off for 4 weeks consecutively (or 6 weeks cumulative) then they are entitled to ask for a redundancy. Short-time: This is similar to temporary layoffs but instead of laying employees off completely an employer could trim their hours back e.g. instead of working from 8am to 6pm they could be placed on temporary short-time working of 10am-5pm. Again this is only a temporary solution and if employees’ pay has reduced by more than 50% for 4 weeks consecutively (or 6 weeks cumulative), then they are entitled to ask for a redundancy. Give the employees other tasks: Employers can ask their employees to pick up other tasks. A short-term fall in work is a perfect opportunity to get employees to catch up on the niggly jobs that have been on the to-do pile for far too long. Long-term options Restructuring: If the current business operations are unsustainable then a business may choose to go down a different route. As a result, this might require considering a restructure of the company. This may produce redundancy but it could then be avoided by offering employees new roles in the new structure or redeployment. Retraining: A company could make use of loyal employees by retraining them to work in the more thriving parts of the business. Let’s say a company designs and manufactures a variety of products. One of the product lines has falling demand while another has increasing demand. The company could retrain the designers of the falling product on a new product or existing successful product and then redeploy them. Secondment: This is like a temporary redeployment whilst a company works to get the department back on track.
If, after these options have been explored, redundancy is the only option left, it’s vital for employers to follow fair procedures when making employees redundant. If there’s reason to suspect unfair dismissal by reason of redundancy then employers could face an employment tribunal.
Our consultant says “Dismissing employees by text message is almost certainly going to be an unfair dismissal but in this case, if the company shuts down there would be no-one for the employees to sue. Even in cases such as this where the whole company is shutting down, it is important to follow full and fair procedures to avoid compensation being payable from the assets of the company if there are liquid assets available.”