Redundancy and Restructuring

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 circumstances, the method and content of this consultation are prescribed. Consultation with staff and unions will generally include the reasons, methodology, and measures to avoid 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 staff member has two, or more, years of continuous service, they may be entitled to a redundancy payment.

Read more: Contracts: Getting It Right.

Redundancy or restructuring

If you are reducing posts, it is redundancy.

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

Read more: The do’s and don’t’s of redundancy and restructuring.

Procedure

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

Having heard the business case and proposals from the Headteacher/CEO, the Governing Board or Trustees will need to declare a potential redundancy situation formally. 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 on 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, including making the enhanced discretionary payments.

Academies have the 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 members aged 55+, redundancy also results 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 how 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, suppose 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. In that case, they will not get a redundancy payment.

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


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