Last month, P&O Ferries found themselves in the firing line after dismissing 800 employees without notice via video message.
It begs the questions: what went wrong? And what should you do – or avoid doing – to get it right?
Here are the takeaway points…
1. Check that redundancy is appropriate
The first question to ask when checking whether a company has followed a fair redundancy process is: ‘has work of a particular kind ceased or diminished?’
There was evidence to suggest that work for P&O Ferries had not diminished and it was still in demand. This is problematic for a redundancy case, where one of the following reasons typically apply:
- you feel your employee’s role is no longer necessary to your company
- you want to change or eliminate your employee’s role
- your company has closed or is in the process of closing
- you’re moving to a new location
A redundancy is fair if your employee’s job is no longer needed or useful. For instance, you might now have machinery that can take over the work of an employee.
If you make an employee redundant and then immediately hire someone else to do their job, the role wouldn’t be redundant. This makes you liable for an unfair dismissal claim.
If you rehire someone, you’d need to be able to show that you didn’t need the role when making the redundancy. There needs to be evidence of a change in your company’s circumstances which meant you had to bring it back.
It’s also important to note that you can’t make staff redundant on the grounds of poor performance or misconduct. In this case, you’d need to follow a capability or disciplinary procedure.
2. Notify the RPS
It doesn’t appear that P&O notified the Redundancy Payment Service (RPS). You need to do this by law if you’re making 20 or more employees redundant within a 90-day period. If you don’t, you face a hefty fine or even prosecution.
You can notify the Redundancy Payments Service (RPS) about your planned redundancies by filling in and sending off a HR1 form (it’ll give you an address on the form).
If you’re making between 20 to 99 staff redundant, you need to notify the RPS 30 days before you make any redundancies. For 100 or more staff members, it’s 45 days.
P&O’s CEO Peter Hebblethwaite recently admitted to MPs that he didn’t carry out consultations prior to dismissing staff.
As the dismissals involved over 20 employees, P&O would need to follow collective redundancy rules and carry out these steps:
- Notify the RPS before starting the consultation.
- Consult with a trade union representative or an elected employee representative. (If you don’t have either of these, you need to elect one.)
- Tell the representatives and staff about the redundancies you intend to make and give them time to consider what you’ve said.
- If anyone asks for more information, respond.
Any redundancy you make is likely to be unfair if you don’t consult your employees first. A consultation should be a two-way process. It should give your employee an opportunity to challenge your decision and put forward an alternative solution.
If you’re making less than 20 employees redundant, there are no rules on how you should consult. But if your employee has worked for you for two years or more, it’s best practice to have at least three redundancy meetings with them over a 14-day period.
You should consult all staff who the redundancy will affect – not just the ones at risk. You could do this in person or online for remote workers.
In this meeting, explain:
- that redundancy is being considered and why
- how many redundancies you might make
- the next steps and how your process will work
Give your staff the opportunity to ask questions and be transparent with them.
4. Give notice
P&O employees had their jobs terminated with immediate effect, so they didn’t receive a notice period.
Once you’ve finished the consultation process, you’re required to give redundant staff a notice period and leaving date. The length of the notice period depends on how long your employee has worked for you.
The statutory notice periods are:
- one week’s notice - if your employee has been employed between one month and 2 years
- one week’s notice for each year - if your employee has been employed between 2 and 12 years
- twelve weeks’ notice - if your employee has been employed for 12+ years
These are the minimum notice periods you need to fulfil but the length will depend on what’s written in your contract. You can give more notice if you want to.
Then, you’ll need to pay staff through their notice period. Or, if their contract says ‘payment in lieu of notice’, you can pay them instead of giving them a notice period.
If your employee has worked for you for two years or more, you’ll need to provide statutory redundancy pay on top of this. You should calculate redundancy pay based on your employee’s age, length of service, and weekly pay (the average your employee earned over the 12-week period before they got their redundancy notice).
There’s a statutory limit on weekly pay for redundancy. If you make staff redundant after 6th April 2022, the cap is at £571.
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Need Face2Face support?
If you need to carry out a redundancy process, you don’t have to do it alone – or at all if you don’t want to. With expert HR support, you can do right by your staff and stay protected from legal risk.
With Peninsula Face2Face, your HR expert will handle those difficult but necessary conversations with employees. They can either do it on your behalf or support you through it. They’ll also make sure you follow all the right steps – and provide legally binding documentation of the whole process.
If you have a HR issue on your hands, speak to your adviser today and an expert consultant will visit your workplace at a time that suits you. And if you’re not yet a Peninsula client, give us a call on 0800 028 2420 to start accessing unlimited HR support.