Redundancy and restructuring

Legal definition

The Employment Rights Act (ERA) 1996 defines redundancy as:-

(a) the employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him/her; or has ceased, or intends to cease, to carry on that business in the place where the employee was so employed.

OR

(b) the requirements of that business for employees to carry out work of a particular kind, or to carry out work of a particular kind in the place where he/she was so employed, have ceased or diminished or are expected to cease or diminish.

Redundancy is one of the fair, legally permissible reasons for dismissal. If a fair procedure is followed, and any consultation requirements are complied with.

Employers must undertake consultation over proposed redundancies and in certain circumstance the method and content of this consultation is prescribed. Consultation with staff and unions will normally include the reasons, the methodology to be used and measures to avoid the redundancy.

Fixed term contracts

The ending of a fixed term contract is a dismissal in law and if there are less staff employed upon the termination of the contract it may well be a redundancy situation.

To avoid the risk of an unfair dismissal claim a minimum of a three-step process should be followed. An invitation in writing to a meeting to discuss the ending of the contract, with the right of representation, a written outcome and the right of appeal.

If the member of staff has two, or more, years of continuous service they may be entitled to a redundancy payment.

Redundancy or restructuring

If you are reducing posts it is a redundancy.

If you are making changes to the staffing structure or roles , it is a restructuring – this may or may not include some redundancies.

Procedure

A clear procedure will need to be followed for any dismissal to be fair.

The Governing Board or Trustees, having heard the business case and proposals from the Headteacher/CEO will need to formally declare a potential redundancy situation. They should also approve the consultation letter to unions, proposed timescale and consultation document.

The consultation document should explain the background and contain details regarding the proposal and the processes which are going to be followed to achieve the proposed changes. It should also contain information about salary protection and selection processes, if appropriate. The document should also have the proposed timescale in it.

It is this document which staff comment upon during the consultation period. Those declaring the redundancy situation need to meet to consider any comments and answer any questions from staff. There needs to be a formal response. The document is either adjusted or confirmation is given that the process is proceeding as previously planned.

The school leader will then apply the procedure on behalf of the Governing Board/Trustees. Only if there is an appeal will they have further formal involvement.

Timescale

You need to account for notice periods when planning your timescale and, if appropriate, the fixed points in the academic year that teachers need to be issued notice by. Our recommendation is to allow two terms for the process.

Selection criteria

It is of course your choice, but we advocate a skills audit for a redundancy situation and normally use interviews in a restructuring situation.

Avoidance

The consultation document and redundancy policy should give information of the measures which will be considered to avoid compulsory redundancies.  These may include varying hours, offering suitable alternative employment and seeking volunteers.

Payments

Maintained schools are usually bound to follow their Local Authority’s policy on redundancy payment, which may include making the enhanced discretionary payments.

Academies have freedoms to choose their payments subject to meeting statutory requirements and bearing in mind that some staff may be protected by TUPE (requiring payment in line with their former Local Authority policy).

Currently, for Local Government Pension Scheme member age 55+, redundancy also result in immediate payment of pension benefits with a resultant cost to the employer, which can be significant.

There is an open consultation, following the introduction to the Exit Pay Cap, which will change the way in which redundancy and pension payments are calculated.

Employees who decline a post judged to be “suitable alternative employment” may forfeit their right to a redundancy payment. Similarly, if an at-risk employee is offered a suitable position at any establishment covered by the Local Government Modification Order, (which includes all schools and academies) before the effective date of redundancy, they will not get a redundancy payment.

Legal rights

Maintained schools are usually bound to follow their Local Authority’s policy on redundancy payment, which may include making the enhanced discretionary payments.

Academies have freedoms to choose their payments subject to meeting statutory requirements and bearing in mind that some staff may be protected by TUPE (requiring payment in line with their former Local Authority policy).

Currently, for Local Government Pension Scheme member age 55+, redundancy also result in immediate payment of pension benefits with a resultant cost to the employer, which can be significant.

There is an open consultation, following the introduction to the Exit Pay Cap, which will change the way in which redundancy and pension payments are calculated.

Employees who decline a post judged to be “suitable alternative employment” may forfeit their right to a redundancy payment. Similarly, if an at-risk employee is offered a suitable position at any establishment covered by the Local Government Modification Order, (which includes all schools and academies) before the effective date of redundancy, they will not get a redundancy payment.

For our client schools there is a redundancy/restructuring toolkit behind the login below.

Further HR Guidance

If you are an existing subscriber to Education HR, login to view further guidance and documents.

We’re here to help

If you are interested in expert HR advice and support, please contact us and we will get back to you.