Money’s too tight to mention Restructuring and its implications

1. Money’s too tight to mentionRestructuring and its implications Thursday 26th June 2014

2. Defining redundancy • Section 139 ERA “…if the dismissal is wholly of mainly attributable to …” • Closure of the entire school or place of work • A reduction in the need for employees to do work of a particular kind at the school

3. Examples of redundancy • Reduction in the need for employees to do work of a particular kind… • Reduction in the number of employees due to economic pressures (e.g. a fall in student numbers or budget cuts) • Internal reorganisation to make more efficient use of rules and duties • Technological developments resulting in change to some or all job functions • Relocation of the school

4. New school academy – case study Background • New school academy has seen student numbers drop over the last few years and projected student intake levels are forecasted to be low for the next two-three years – placing pressure on the schools budget • New school academy needs to make urgent cost savings… • The school Business Manager and the Head Teacher have looked at the budget and feel they need to consider making one teacher redundant • There is a surplus of teaching lessons in English • The school could reduce the number of English teachers by one, without any detrimental impact on teaching • All teachers at the school have more than two years’ employment

5. Q How do we start the process and how do we ensure there are no costly Employment Tribunal claims? Governor approval • Call a meeting with the Governors • Explain the provisional plan • Discuss alternatives • Explain why this is necessary • Seek formal approval and delegated authority to progress • Consider compulsory collective consultation with the Unions • All Governors are different, some hands on and some hands off

6. Q We want to make one English teacher redundant. Who should be selected? Redundancy selection - pool • Identify an appropriate pool for selection (which teachers should be included in the pool) • Consider appropriate selection criteria (how we should score them) • Follow a fair and reasonable procedure (including following any policies you have)

7. Q What should we include in our selection matrix? Can we take a commercial approach? Redundancy selection - criteria • Selection criteria • Clearly defined • Objective • Capable of independent assessments • Potentially fair selection criteria may include: • Performance, length of service, attendance records, timekeeping, disciplinary records, qualifications • Note – there are no fixed rules about what criteria to use and generally speaking a school has a wide measure of flexibility in this regard (unless collectively agreed or customary selection matrix)

8. Q I’m comfortable with the selection matrix we have used, but are there any areas of concern that we should be aware of? Redundancy selection – criteria • Subjective criteria (unable to substantiate) • Double counting • Wrong scores • Discrimination • Selection criteria • Application of criteria

9. Commercial decision Q The English teacher selected has performance issues. I’m concerned that a Tribunal will think we have dismissed for performance reasons – not redundancy? • A Tribunal should not look behind the school’s decision – provided it is genuinely the reason for the dismissal • Association of University Teachers v University of Newcastle upon Tyne [1987] ICR 317 • The EAT decided that a lecturer was redundant, notwithstanding continuing student demand for his course. The University was entitled to decide that it could no longer afford such a course following a cut in funding

10. Consultation with the individual Q OK, we have scored the employees and one teacher has scored lowest . What do we do next? • Arrange a formal individual consultation meeting with individual employee at risk of redundancy. • Make sure the invite letter is carefully drafted. • Provide the employee with a copy of their scores. • They have the right to be accompanied by a TU representative. • Take advice on what questions / approach to take at the formal consultation meeting. • Importance of open mind and stressing the redundancy proposal is only a provisional decision at this stage.

11. Consultation with the individual Q We held our individual consultation meeting with the teacher. She wants to know why we haven’t considered “bumping”? • Bumping is the process of moving a potentially redundant employee (A) into another role, and dismissing the employee currently performing that role (B). • There is no general obligation on an employer to ‘bump’, but in some circumstances it may be unreasonable not to do so. Always consider.

12. Consultation with the individual Q During the individual consultation meeting the TU rep asked what we had done to look at alternative roles. • There is an obligation to look at alternatives, including whether there is any suitable alternative work available • Consequences of failure to comply with the obligation • unfair dismissal claim

13. Alternative work • The scope of the duty to look for alternative work • Reasonable steps • Does the obligation extend group-wide? e.g. LA maintained schools and Multi Academy Trust Schools… • Suitability and reasonableness • Onus on proof regarding suitability and unreasonableness is on the employer determined on a case by case basis • Both issues are questions of fact for the Tribunal

14. Alternative work • Suitability and reasonableness • assessed objectively AND subjectively • relevant factors include: • job content and status • pay and other benefits • working hours • job prospects • employee’s age and/or health • acceptance of another job • personal preferences • insecurity of new job • different skills required

15. Alternative work • Offers during maternity leave, adoption leave or additional paternity leave • suitable alternative vacancy • not substantially less favourable • effect of finding a suitable alternative vacancy • Trial periods • statutory trial periods

16. Alternatives to redundancy Q The TU rep has asked why we haven’t considered other alternatives? For example, why don’t all other teachers take a pay cut or reduction in hours? • You should consider alternatives, including:- • Voluntary redundancy • Contractual changes (e.g. pay / hours) • Sabbatical / unpaid leave • Secondments • Pay freeze • Recruitment freeze • Should consider but not mandatory to adopt…

17. Second redundancy meeting Q • It is always advisable to have at least 2 formal redundancy consultation meetings with the employee • Discuss and respond to any points raised • Continue to look at alternatives and ways to avoid the proposed redundancy • Document the process with formal invite letters and minutes of the consultation meetings We’ve had our first individual redundancy consultation meeting? What happens next?

18. The redundancy package Q • Formal decision letter – with the right to appeal. • The redundancy payment • Custom and practice? • Notice pay? PILON clause? • Age/salary/length of continuous service • Tax free • Pension issues (over 50 years) • Why enhance payment? • Have they taken employment with an “associated school” Redundancy Payments (Continuity of Employment in Local Government etc) (Modification) Order 1999 • Settlement agreement? • Charitable funds… We are going to confirm redundancy. What should the employee be paid?

19. Practical steps • Minimising the negative impact • Follow your procedures and adopt a fair process • Keep the union on board and keep them fully advised of your proposals • Maintain communications with the employees • Consider enhancing the package – linked to a settlement agreement • Provide reasonable time off during notice period to look for alternative work • Consider whether TUPE applies if outsourcing work (e.g. outsourcing cooks or cleaners)

20. Questions Paul Scope Partner | Employment E: paul.scope@wardhadaway.com T: 0191 204 4352 Graham Vials Associate | Employment E: graham.vials@wardhadaway.com T: 0191 204 4383