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Redundancies: an inevitable outcome of public sector spending cuts?

The next round of public spending cuts, due to be announced next month, are likely to see police budgets cut nationwide by between 25 and 40 percent.

Over the last few years forces have already to make significant changes to their operating models to cope with reduced budgets, including the use of shared service centres, estates rationalisation, modern technology and collaborative procurement. 

Forces may struggle to make further savings through additional changes to their operating models. The upcoming  round of budget cuts may impact on the numbers of police officers, see a reduction in neighbourhood policing and of proactive prevention work.

Below we give an overview of what is involved in the redundancy process and set out the steps forces can take to limit their exposure to risk. 

What is a redundancy?

In legal terms, a redundancy situation arises where an employer's requirement for an employee to undertake the work they are engaged to do has ceased or diminished. This can arise in a closure situation or where an organisation, whether due to funding cuts or other financial constraints, needs to reduce its headcount.

Managing redundancies fairly

Making redundancies exposes an employer to a number of potential claims if employment processes are not followed. Employers should ensure they:

  • Get the selection pool right - identify an appropriate pool of employees for selection for redundancy – this should include all employees doing the same role or roles which are interchangeable.
  • Consult - employers have the duty to consult with employees individually throughout the process. Where 20 or more people are being made redundant within a period of 90 days an employer has enhanced duties of collective consultation, eg with a trade union or employee representatives. 
  • Decide fairly - apply an objective process when selecting who to make redundant – the employer must be able to provide logical, non-discriminatory justification for all decisions.
  • Look at alternatives - consider suitable alternative employment within the organisation. 
  • Prepare for appeal - employees are entitled to appeal against any decision to make them redundant.

Redundancy payments

To be eligible for a statutory redundancy payment, employees must have two years' continuous employment. The level of statutory redundancy pay is calculated by applying a formula based on age, length of service and pay. 

Some employers may also have an enhanced redundancy scheme which provides for higher payments.

Redundant employees are also entitled to their contractual notice, whether this is worked or paid in lieu, and any accrued holiday payments outstanding as at the date employment ends.

Top tips

Forces finding themselves facing a potential redundancy situation should consider whether:

  • Any employees have less than two years’ service. It is generally easier to terminate employment in this situation and the employee will not be entitled to a redundancy payment. 
  • Employees might agree to a change in employment terms? For example, during the recession many employees agreed to reduced salaries or reduced hours to avoid redundancy dismissals.
  • You can offer voluntary redundancy, or freeze or limit recruitment and overtime? Also review relationships with contractors and agency workers (ie keep the work for permanent employees). 

We have a depth of expertise in managing re-structures and redundancy. Please get in touch if you feel this issue may affect you. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com

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