Any business reorganisation can be a stressful time for an employee, whether it is an outright change of employer, or because potential redundancies have been announced.
Historically, if your employer was bought over by another company or lost a major contract providing a particular service you worked on, the likelihood was that you would lose your job as the new company or new contractor would refuse to carry on employing you. However, as result of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), you now receive far more protection from dismissal or changes to your contract of employment in these situations.
Nowadays, in most cases you will transfer over to that purchasing company or new contractor and become their employee. In this way, your employment is protected from termination along with your terms and conditions and continuity of employment.
If your employer announces a significant drop in business or there are rumours that they are in dire financial straits, you and your colleagues may understandably begin to worry that your roles could be made redundant. Unfortunately, there can be very little you can do in terms of improving your employer’s financial position and so it can feel as if you are helpless in the redundancy process. But, there are still requirements as to what your employer must do in a redundancy situation and you have certain rights in terms of consultation, alternatives to redundancy and statutory payments.
The following are some of our most frequently asked questions when it comes to TUPE and redundancy.
TUPE occurs if your employer’s business, or part of their business, transfers to a new owner, or if the business merges with another business to create a new organisation. It can also apply if work moves from one contractor to another such as in an outsourcing situation, or where a contract is lost. In TUPE, ‘transferring’ means that you will automatically transfer from your current employer to a new employer.
If you do not wish to personally transfer to the new employer, you can object by tendering your resignation to outgoing employer. Your resignation should be tendered before the transfer takes effect. Following your resignation, your employment will be terminated or the outgoing employer may decide to offer you a different job within their business. However, if you do object you have no rights to claim unfair dismissal or a redundancy payment, unless you object for particular reasons. So you should always think carefully before objecting. If you are offered alternative employment with your existing employer, you remain employed by them.
If the loss of business is substantial, your employer may decide that it cannot continue to run part, or all, of its business. Depending on how the work under the contract was organised it could amount to a Service Provision Change or ‘SPC’ meaning that TUPE may apply to you. In these circumstances, the outgoing employer may agree to TUPE transfer a portion, or all, of its business to the new employer who has succeeded in gaining the client contract.
Before the transfer, your employer is obliged to give you certain information about the transfer and why it is happening. If any changes are being proposed they will also have to consult with you and your colleagues via your elected representative. During the consultation process the representative should receive written information from the employer that sets out the planned TUPE transfer.
Your ‘employee representative’ is either a representative of your trade union, or an elected representative from your workforce. The number of representatives in a TUPE transfer will differ depending on the total number of employees affected.
If you have transferred under TUPE, you are protected from any change to your contract of employment that occurs because of the transfer. If your new employer does breach this protection, the corresponding contract changes will be void. Changes to your contract of employment will only be valid if they are required for the running of the business.
The duty to inform and consult with affected employees and their representatives is of the utmost importance to ensure that employees are aware of changes to their employment. If your employer has failed to notify you of the TUPE transfer, you can bring a claim against them in the Employment Tribunal. Failure to inform and consult could cost your employer up to 13 weeks’ pay for every employee affected by the transfer.
Your employer may be forced to make redundancies because of the TUPE transfer. If this does occur, your employer will be obliged to consult with all potentially affected employees and their employee representatives.
If you are worried about redundancies stemming from a TUPE transfer, you should consult your employee representative and ask them to discuss these concerns with your employer.
Thorntons’ Employment Law team are happy to talk through any worries you may have surrounding TUPE and redundancy. Please contact us for further support and advice.
You have a number of rights if you are facing redundancy:
There are two types of redundancy pay: statutory and non-statutory.
Statutory redundancy pay must be paid to you if you have at least two years’ continuous service with your employer. Statutory payments are calculated using a fixed formula which looks at your age, length of service and how much you are paid. Crucially, there is a statutory cap on statutory redundancy pay which is currently set at £14,370.
With non-statutory redundancy pay, this is usually offered to employees who have been made redundant but do not have two years’ service or is offered to you on top of your statutory redundancy pay (possibly as an incentive through voluntary redundancy).
A dismissal on grounds of redundancy is one of the specific categories of a ‘fair dismissal’; however, this still requires your employer to follow a fair procedure.
The first step in the redundancy process requires your employer to put you on notice of possible redundancies. This is often done through an ‘at risk’ letter.
Thereafter, your employer should identify any roles which are potentially redundant. If there are a number of employees doing the same or a similar role, a selection pool should be drawn up. The pool must relate to the type of work that requires a reduction in workforce.
Your employer should then score the pool so the best employees in the pool can be identified. The methods used to score you could include matters such as skill set, performance, disciplinary record and length of service, but should not include any discriminatory matters like gender or absence caused by disability or pregnancy-related issues.
Once the pool is scored, your employer should enter into meaningful consultation with you about your possible redundancy and as part of this look at ways your redundancy could be avoided. Your employer should then consider any suggestions you have raised and take note of these points when deciding whether your role is to be made redundant.
Despite the fact redundancy is one of the specific categories of fair dismissal, this does not mean that it cannot be challenged by you if you feel the redundancy decision was unfair and a tribunal can find a dismissal by reason of redundancy was unfair. As there are a number of substantive and procedural hurdles your employer must follow when making redundancies, employers sometimes find themselves having missed out a crucial part of the process or not properly consulting with employees.
The nature of some redundancies means that you may be offered an alternative role instead of losing your job and your employer should in a redundancy situation look at whether any alternative positions exist for you.
However, in terms of your acceptance of any alternative role offered, this depends on the job actually offered to you and any rejection you make of an alternative role must be reasonable. What this means is that the alternative employment offered to you must be suitable relative to your current job and skillsets. For example, an offer with a significant drop in salary would likely be reasonable for you to refuse (although other factors would be relevant).
Getting legal advice as to whether an alternative job offer is reasonable is crucial as if you refuse a reasonable offer you will forego any right to any statutory redundancy pay due to you. If you refuse an unreasonable offer, your right to any statutory redundancy pay due to you continues.
The act of doing this in a redundancy situation is known as ‘bumping’ and can be lawful in certain circumstances. Bumping involves your position having been made redundant but you are transferred over into another position, with the current holder of that second position made redundant to allow you to fill it.
There is generally no requirement for your employer to consider ‘bumping’ you into another role but it is often asked for by potentially redundant employees or considered by an employer who risks losing an employee through redundancy they are otherwise eager to retain. Nevertheless, a failure to consider bumping can render a redundancy unfair so it is something your employer should usually look into if you are told you are at risk of redundancy.
The most common instances of bumping concerns employers looking to make a more senior employee redundant but retain those employees working under that senior employee. Given that the more senior employee is likely to have longer service, better qualifications and so on, if you are a senior employee in that position, your employer should ask whether you would be prepared to move down into one of those junior roles. While you may be against that suggestion for a variety of reasons, if you were willing to accept, this would usually require your employer to give real consideration to bumping you into one of those more junior posts.
We can help you understand the TUPE transfer process, highlighting your TUPE rights and the duties and obligations of your outgoing and new employer. Our specialist employment lawyers can also correspond with your employer to raise any concerns that you may have about the way in which the TUPE transfer is being conducted.
The Thorntons Employment Law team has considerable experience in advising in the area of redundancy, and can review your individual situation to ensure that your employer has undertaken a fair redundancy procedure.
Call us on 03330 430 350 to find out more about our services, or complete our online enquiry form and we will contact you.
Depending on your case and circumstances, the first step is usually to arrange an appointment to come into one of our local offices to meet an Employment Law Solicitor to discuss your situation and the way forward. We will outline your options and, depending on your circumstances, we can look at various funding options to help with your case costs.
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