Demystifying Mixed Contract Redundancies

Why not read our latest blog post, Long-term absence dismissal not always unfair?

Mixed Contract StaffMany small firms employ workers on temporary or short term contracts to cover maternity absence or to cope with seasonal demand.  And many employ part timers to cope with peaks in the business day or week.  Both are ideal ways of managing costs and supporting full-time permanent staff.  Both are ideal ways of staffing the firm to match the local market for goods and services.  In addition, some also make use of agency workers for quick fix to sudden absence.  But what happens when a downturn suggests that some staff need to be made redundant?  Who goes and how does the employer decide?

This problem is a minefield.  Whilst a bit negative, the legal approach to the discussion has to be to ask “how do I minimise the chance of this ending in Tribunal”.  Every option needs to be evaluated with this in mind.

First a definition.  Redundancy literally means that a firm finds that it has a ‘diminished need for work of a particular kind’. This is a very important phrase because both ‘diminished need’ and ‘work of a particular kind’ have specific meanings.  In making roles redundant, the employer needs to be able to show that there is a link between the future performance of the firm and the roles employed and that there is truly a diminished need for particular types of roles.  No tribunal can comment on business decisions but there must be business justification for the redundancies.  In making roles redundant, the employer needs to consider all comparable employees in a pool from which a selection is made – each pool must comprise all those doing a particular kind of work, whatever their contractual relationship with the firm.

Statutes and Regulations

There are five statutes or regulations that bear on the case of mixed contract redundancies.  One Act demands that men and women are treated equally: take care here because most part-timers are women.  By making part-timers redundant first, businesses can be acting in a discriminatory way.  Two other statutes demand equal treatment for folk working through agencies.

Two regulations demand that part-timers and temps cannot be treated less favourably than full-time permanent staff.  If, at the point when considering redundancies, these three contract types are employed in comparable jobs, all must be included in the pool and considered together. Of course it would be logical to dismiss the temps first by simply not renewing their contracts but care needs to be taken to ensure that the dismissal and the redundancies don’t coincide or the temps may have a case for unfair dismissal.

There are also additional regulations that apply when 20 or more people are to be made redundant within a ninety day period or where one business is being acquired by another business.

Deciding Who Goes

Going forward the firm needs to have a clear strategy and to meet future objectives the firm needs competence.  The competence of each worker is described by their skills, knowledge and attitudes. The criteria used to decide who from each pool is to go needs to be as objective as possible (and based on evidence rather than supposition and hearsay) and should be based mostly on competence.

The simplest way of deciding is to list the total set of competences needed to perform the role and score each worker against each competence.  Those with the lowest scores, in that pool of staff, are then made redundant.

Demystifying Mixed Contract Redundancies

Using agency workers, temps and part-timers are all attractive economic alternatives to full-time staff and give what is potentially an essential flexibility.  Management does need to be aware that in recent years UK Government has bolstered the employment rights of such workers, aiming to avoid their treatment as a variable cost on the P&L, to be hired and fired whenever the situation demanded corrective action.

Whilst such change seems like a move to the detriment of employers, all it really means is that management need to think more when taking on staff and take a bit more care when it comes to shedding heads.  The last ten years of legislation has not remove management’s right to manage.

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