Redundancy and Notice Pay – The Arcadia Group ‘U-turn’
For those who will unfortunately have to make redundancies in the face of the impact of Covid-19 the government brought into force on 31 July 2020 The Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020. This statutory instrument provides much needed clarification on calculations for redundancy pay and notice pay for employees who had been furloughed under Coronavirus job retention scheme (the Scheme).
This piece of legislation had seemingly been recently overlooked by Sir Philip Green and the Arcadia Group. The Arcadia Group is in the process of making up to 300 of its 2.500 head office staff redundant due to the impact Covid-19 has had on the retail sector.
It has been reported that some of those 300 employees at risk of redundancy would receive full notice pay however furloughed employees who were contractually owed above the statutory minimum had been advised that their payments would be based on the 80% of pay they received as part of the Scheme.
Thankfully for those affected employees the Arcadia Group have made a ‘U turn’ issuing the following statement on Saturday 12th September 2020:
“We recently implemented a policy for those employees who are working their notice on furlough to receive their furlough pay instead of their full pay.
“We got this decision wrong and the board has today amended this policy to ensure all affected employees will receive their full pay.
“We are extremely sorry to all those individuals [affected] for the distress that we have caused and apologise unreservedly.”
It appears that the Arcadia group have heeded to the government’s recently implemented legislation set out above, that confirmed that employees who are being made redundant need to be paid their notice pay and redundancy pay at their full rate by their employers.
So what other common slip-ups do employers make when carrying out a redundancy exercise?
1.The pool for redundancy is not correctly defined
Unless the job roles to be made redundant are stand alone roles within the Company’s structure then there will need to be a pool of employees from which those to be selected for redundancy will be made. Dismissals can be held to be unfair if you are unable to correctly define the redundancy pool. Commonly the pool is either too wide or too narrow. Difficulties for defining the pool can arise when employees perform similar but not identical work. You need to consider such eventualities in advance of defining the pool and have a clear and documented rationale for ultimately defining the pool so that you can justify the inclusion or exclusion of certain individuals within the Company structure.
2. Has a fair selection procedure been followed?
Once the pool has been established you must then ensure a selection process is followed properly to ensure that individuals are correctly selected for redundancy. Ideally individuals should be scored by two or more managers using objective rather than subjective measures which are fairly and transparently applied. Ideally previous appraisals are a good reference point when scoring is made on more subjective measures such as performance.
Scoring criteria within a matrix should be carefully chosen ensuring protected characteristics aren’t inadvertently central to an individual’s low score. Common pitfalls include using attendance as a marker but then including absences related to a disability defined under the Equality Act 2010.
3. Paying lip service to individual consultation and not offering suitable alternative vacancies or exploring alternatives to redundancy
Genuine consultation is an integral part of showing you have acted reasonably in a redundancy dismissal. You must actively look for alternative roles (which could also include a reduction in status and/or salary) within your business before giving notice of redundancy otherwise any dismissal may be deemed unfair. Your legal duty as an employer, is only to take reasonable steps to find alternative roles however you should ensure you have a documented paper trail of your efforts to facilitate such a search.
You should also consider alternatives to redundancies before commencing with a redundancy exercise. Alternatives to redundancies could include measures such as reducing overtime or asking staff to volunteer for reduced hours.
You should also ensure that you offer voluntary redundancies to employees that may wish to take advantage of such an opportunity.
4. Overlooking specific rules that apply to employees on family leave
The most common example is a female employee who is on maternity leave but can equally apply to employees on adoption leave or shared parental leave also. If they are selected for redundancy, they have additional legal protection so you should proceed with caution and obtain specific legal advice. An employee who is at risk of redundancy in such a situation has a legal right to be automatically offered any suitable alternative employment available and resultantly they have precedence over their colleagues within the redundancy selection pool.
5. Failing to hold a dismissal meeting or providing a right of appeal
Redundancy is a potentially fair reason for dismissal however failure to follow a proper procedure can ultimately give rise to an unfair dismissal. Any notice of dismissal should only take place after the consultation process has fully taken place with any viable alternatives to redundancy have been given full consideration.
You should hold at least one consultation meeting (two meetings is preferable) with an employee who is at risk of redundancy before making a final decision and ensuring you have given them the right to be accompanied by a colleague or a trade union representative. Any decision to dismiss on the grounds of redundancy should also be confirmed in writing and it is best practice for the employee to be given a right of appeal in the termination letter. Accordingly, an appeal manager need to be appointed who is independent of the redundancy process to date.
- Please note – this guidance is not intended to be taken as legal advice – for individual situations you will need to take specific legal advice.
- The information in this guide is correct as of 14th September 2020.
- All information provided should be read alongside the relevant Government Guidance at https://www.gov.uk.We hope you have found this note useful and if you do have any queries please get in touch.Marie Walsh
Director, Employment Solicitor and Mediator
Direct Dial 0113 8874670
Reception: 0113 3229222
Address: 4 Park Place, Leeds LS1 2RUVictoria Horner
Direct Dial: 01138874673
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