Redundancy protection – what’s changed?

In this podcast

A raft of employment law changes have come into effect over the past few months. In this edition of the podcast, Zeba Sayed and Stephen Simpson discuss some developments that have perhaps received less attention than others: the changes to special redundancy protection for family-related leave that came into force on 6 April 2024.

Introduction

Robert Shore: Hello, and welcome to the Brightmine podcast, formerly known as the XpertHR podcast. Brightmine is a leading provider of people data, analytics and insight, offering employment law expertise, comprehensive HR resources and reward data to meet every HR and organisational challenge and opportunity. You can find us any time of the day or night at www.brightmine.com.

My name is Robert Shore, and today we’re going to be talking about a subject that the people profession needs to have in its sights. As we all know, this has been a busy time for HR. We’ve seen a lot of employment law changes coming into effect over the past months, all of which need to be absorbed by organisations to ensure that they remain compliant with the new and amended employee rights. Some of these — carers’ leave, flexible working requests and paternity leave changes — have received lots of attention.

Today though, we want to examine some important changes that have perhaps received less coverage but that organisations and HR nonetheless need to have on their radar. And these are the redundancy protection extensions that came into force on 6 April 2024, with the Protection from Redundancy Pregnancy and Family Leave Act 2023. In brief, the Act provides for greater protection against redundancy during pregnancy and for six months after return to work from maternity leave, as well as certain other family-related leave.

Of course, to make practical sense of the new protections we need a bit more detail than that, and to provide that detail I’m joined by two of my colleagues, Zeba Sayed, senior employment law and compliance editor, and Stephen Simpson, principal HR strategy and practice editor. Stephen and Zeba, thank you for clearing the time in your busy schedules to be here today. [0:01:51.2]

Stephen Simpson: Hi, Robert.

Zeba Sayed: Thanks, Robert.

Where the law stood before 6 April 2024

Robert Shore: So, before we get to the changes for special redundancy protection for family-related leave, Zeba, can I ask you first? Looking for alternative employment is already obviously an important element of any fair redundancy process, isn’t it? [0:02:06.8]

Zeba Sayed: Well, it’s part of a fair process and it’s important to note that if an employer makes an employee redundant without considering the question of alternative employment, this could give rise to an unfair dismissal claim.

Robert Shore: Right. And at what point does the obligation to consider suitable alternative employment arise? [0:02:26.5]

Zeba Sayed: So the obligation arises as soon as it becomes clear that redundancies may be necessary. So if we take a step back and start with the basics, a redundancy situation can arise in three different scenarios. The first is where there’s a business closure. The second is where there’s a workplace closure. And the third is where there’s a head-count reduction.

For a redundancy dismissal to be fair, an employer has to show 1) that there is a genuine redundancy situation, so it falls within one of the three scenarios I’ve just mentioned; and 2) that they’ve followed a fair redundancy procedure.

Robert Shore: Yes. And of course, just to say again we’re laying out at the moment where the law stood before 6 April, aren’t we? So we’re not talking about changes yet.

And the legislation there doesn’t define what constitutes a fair procedure, does it? [0:03:14.6]

Zeba Sayed: No. Ultimately, what’s fair will depend on the circumstances. However, caselaw tells us that the basic approach for employers to take is to give employees as much warning as possible of any impending redundancies, and there should be a consultation process. And what this means is holding a number of meetings with employees who are at risk to ensure that they understand the reason for the redundancy, they understand the selection pool and the selection criteria if it’s relevant, the timescales, the financial package, and what happens next. And during this whole process the employer should also ensure that there’s a two-way discussion on alternatives to redundancy. And that includes alternative employment opportunities that may exist within the organisation or any group company.

Robert Shore: Right. So the obligation, does it continue after the employee has been
selected for redundancy? [0:04:04.5]

Zeba Sayed: Yes. So where the redundancy has been confirmed, there’s a continuing obligation on the employer to explore suitable alternative employment throughout the employee’s notice period and up to the termination date.

Robert Shore: Okay. And what if there aren’t any suitable alternative roles within the company? [0:04:22.1]

Zeba Sayed: Well, there’s no duty on the employer to create a suitable alternative role where none exist. However, the employer could consider other options, such as offering outplacement services to help employees find work elsewhere. And also do remember that an employee may be willing to consider a role that’s less senior or comes with lower pay if it means staying with a company that they’re vested in. So the employer should really be proactively be communicating all available vacancies to the affected employees, and not just vacancies that they deem to be suitable.

Robert Shore: Okay. And what happens where there is a suitable alternative role available? What are the obligations on the employer in that situation? [0:04:56.9]

Zeba Sayed: Where a suitable alternative role exists, the employer must decide 1) whether to invite employees to apply, in which case the employer must ensure that it selects the candidate in a fair way; or 2) to directly extend offers to those affected by the redundancy. And obviously the employee should be given enough information about the position to decide whether it is indeed suitable for them as well.

Robert Shore: So there’s no automatic right to be offered a suitable alternative role? [0:05:27.5]

Zeba Sayed: No, there is no automatic right except in cases where special protection relating to pregnancy, maternity leave, adoption leave and shared parental leave applies. As you mentioned at the outset, this special protection was extended by new regulations that came into force on 6 April 2024.

Redundancy protection for family-related leave

Robert Shore: Right. Stephen, can I bring you in at this point? So we’ve just had reference to the new regulations. But before we get onto those, let’s just set out what the previous position was in relation to special redundancy protection for family-related leave. Can you take us through that? [0:06:01.6]

Stephen Simpson: Sure. So previously the extra protection gave a shield in a redundancy situation to employees during their maternity leave, shared parental leave or adoption leave. Employees on these types of leave have the right to be offered a suitable alternative vacancy if one is available before being made redundant.

Robert Shore: Okay. So what does this additional right entail? [0:06:23.7]

Stephen Simpson: Essentially it means that employees with this protection have the right to be offered any suitable alternative vacancy that exists in preference to others who are also being made redundant without having to go through a redundancy selection process, for example scored against a redundancy selection matrix or having to take part in a competitive interview process to retain a role.

Robert Shore: Right. And that’s the case even if there are others in the redundancy pool who are more experienced or who have a better overall track record? [0:06:51.5]

Stephen Simpson: That’s right. So employees on these types of family leave have automatic priority access to redeployment opportunities over other redundant employees. In fact, it’s one of those rare instances in UK employment law where a form of positive discrimination is actually required.

Robert Shore: So, what counts as a suitable alternative vacancy? [0:07:12.0]

Stephen Simpson: So the offer, which must be made before they are dismissed, must be for work that is both suitable in relation to the employee, and appropriate for them to do in the circumstances. The terms and conditions of employment must not be substantially less favourable than if they had continued in their original position.

One thing that I think sometimes is forgotten is that it includes a suitable alternative vacancy within the organisation but also includes any suitable alternative vacancy within an associated employer too, so it’s actually quite wide.

Robert Shore: So what if there’s any doubt as to whether the alternative role is suitable for the employee? [0:07:48.3]

Stephen Simpson: Well, the employee is actually entitled to a statutory trial period of four weeks in the proposed new role to assess whether or not the job is suitable for them.

Robert Shore: And are there any consequences for an employee turning down an offer of an alternative vacancy that the employer has deemed suitable? [0:08:05.1]

Stephen Simpson: Yes. Technically the employee will lose the right to statutory redundancy pay if they unreasonably refuse an offer of suitable alternative employment, although in reality this should be a last resort for the employer because the employee is likely to dispute the withholding of statutory redundancy pay, and actually in practice you don’t want to force someone into a role that they don’t actually want to do.

Robert Shore: What is the employee’s status if they do accept the alternative role? [0:08:31.4]

Stephen Simpson: So if alternative employment is offered and accepted, the full notice of termination has been given, it will be treated as a variation to the employee’s contract of employment. Their continuity of employment will not be broken and they will not be treated as having been made redundant. Of course, this does mean that they won’t be entitled to a redundancy payment.

What’s changing

Robert Shore: So, we’ve set out how things stood before. Now we need to discuss what’s changing. And it’s about really an extension, isn’t it, in relation to pregnancy, post-maternity and miscarriage? So Zeba, can you break down what this extended protection is? [0:09:06.6]

Zeba Sayed: Sure. So under new legislation, an employee has the right to be offered a suitable alternative vacancy if one exists before being made redundant, and that’s from the point that they inform their employer of their pregnancy.

The new rules apply to any pregnancy notified to the employer on or after 6 April 2024. Previously this right did not extend to employees who were pregnant and had not yet gone on maternity leave. So from this perspective the extension is significant.

Robert Shore: Okay. And what about employees returning from maternity leave? [0:09:41.7]

Zeba Sayed: So, as Stephen has already mentioned, the previous position was that an employee on maternity leave had the right to be offered suitable alternative employment over other at-risk employees before being made redundant. However, this special protection came to an end as soon as the employee returned back to work. Under the new roles, where maternity leave ends on or after 6 April the special protection continues for 18 months from the child’s birth date, or 18 months from the expected week of childbirth if the employer has not been notified of the child’s birth date.

Robert Shore: So practically, this means that a new and expectant mother could potentially be protected for around two years. Is that right? [0:10:23.2]

Zeba Sayed: Yes. So as a rule of thumb, most people wait until the end of the first trimester to tell their employer about their pregnancy. So if we take that into consideration, an employee who then goes on to take maternity leave could potentially receive protection for around two years. And do remember, that’s regardless of how much leave the employee has actually taken.

Redundancy protection in the case of a miscarriage

Robert Shore: Yes. And how about an employee who has suffered a miscarriage? [0:10:47.8]

Zeba Sayed: Well, in the unfortunate event of a miscarriage, the protected period would end two weeks after the miscarriage occurred. However, after 24 weeks of pregnancy, a loss is considered a stillbirth, so in those circumstances an employee would be entitled to statutory maternity leave, and the 18-month protection period would apply.

Robert Shore: Just to be clear, the new right is not a prohibition, though, on making employees redundant during the protected period? [0:11:15.5]

Zeba Sayed: No. The special protection does not prohibit employers from making employees redundant. However, during the protected period employees have the right to be offered any suitable alternative vacancy that exists over other employees in the pool without having to go through a competitive process. This means that employees within the protected period can still be selected for redundancy, and as long as there’s a genuine redundancy situation and a fair procedure is used, the redundancy will be fair.

Redundancy protection in cases of adoption and shared parental leave

Robert Shore: Stephen, a similar extended protection period is introduced now for those returning from adoption leave and shared parental leave too, isn’t it? [0:11:53.9]

Stephen Simpson: That’s right. As I mentioned at the start, anyone on shared parental leave or adoption leave previously had extra redundancy protection but that’s now extended to a post-leave period.

For shared parental leave the extended period for protection applies only if the employee is returning from a period of at least six consecutive weeks of statutory shared parental leave. That extended period is 18 months from the child’s date of birth or placement for adoption. In other words, if they’re being made redundant during that period they have the automatic right to be offered a suitable alternative vacancy if it’s available.

Robert Shore: So when does the new right kick in for shared parental leave? [0:12:33.4]

Stephen Simpson: The new right to post-leave protection applies to relevant periods of shared parental leave, i.e. six consecutive weeks’ leave or more, starting on or after 6 April 2024.

Robert Shore: And what about adoption leave? [0:12:46.5]

Stephen Simpson: Similar. So the right to be offered a suitable alternative vacancy previously applied to anyone actually on adoption leave, but that’s now extended to a post-leave period too.

Robert Shore: And the date when the adoption leave right kicked in? [0:12:59.0]

Stephen Simpson: The new right to post-leave protection applies to periods of statutory adoption leave ending on or after 6 April 2024. In the case of adoption, that period is 18 months from the placement for adoption.

Robert Shore: Okay. And are there any caveats to that, that we ought to be aware of? [0:13:15.2]

Stephen Simpson: There are a couple of important caveats. One is that employees essentially get only one protected period. So if an employee has already taken maternity leave or adoption leave, that’s the leave to which their protected period applies. The protected periods I’ve just described apply where the employee is taking shared parental leave only.

It’s worth mentioning just too, as a second caveat, that paternity leave isn’t covered at all by the changes. In other words, there’s no protected period in relation to paternity leave.

Common questions

Robert Shore: We’re talking then about various extensions of protection but as you’ve both made clear, there’s a lot of detail in there and some caveats. So let’s look at some common questions that have come in via the site and that we know of from practice as well.

What are some common compliance issues related to suitable alternative employment?

So Zeba, a question for you. When you’re in practice as a solicitor you dealt with cases about suitable alternative employment on redundancy. And can you just talk us through a little, you know, what sort of issues arose? [0:14:05.6]

Zeba Sayed: Yes. I dealt with a few cases where the suitability of a role was contested. And what makes this quite a difficult area is that the issue is highly fact-sensitive. So you need to think about the employee’s skills and experience, their pay, status, location, whether they can also step into that role (albeit with a reasonable amount of training).

Stephen Simpson: If an employee rejects a suitable alternative role, am I right in thinking that the employer can withhold statutory redundancy pay? [0:14:34.7]

Zeba Sayed: Yes, but only if the rejection is unreasonable, and that’s a subjective test that needs to be considered from the employee’s point of view, taking into account their personal circumstances.

I remember a claim a few years ago where I acted on behalf of a claimant who was a nurse. She was offered a role that was deemed to be suitable by her employer, and it was in terms of seniority and pay grade, but she rejected it on the basis that the role required working more nights, which she couldn’t commit to due to personal reasons. In that case, the employer refused to pay her any redundancy pay. However, the tribunal found that the claimant’s rejection was reasonable, and in the circumstances she was entitled to redundancy pay.

So this just reiterates the point that employers should only withhold redundancy pay after very careful consideration. And as Stephan mentioned earlier, in practice you don’t really want to force someone into a role that they don’t want to do.

Does the legislation prohibit employers from making a pregnant employee redundant?

Robert Shore: Right. So Stephen, now a question for you. It’s a question that we’ve had come in. Does the legislation prohibit us (this is an employer speaking) from making a pregnant employee redundant? [0:15:40.2]

Stephen Simpson: So sometimes there’s a misapprehension that employers can’t actually make someone who’s pregnant or on maternity leave redundant, in other words that there’s some sort of ban on making employees who are pregnant or on maternity leave redundant. And that’s actually simply not the case, as Zeba’s mentioned already.

If there is a genuine redundancy, they can still be included in the redundancy process. However, I would urge HR to be ultra-cautious if that’s the case. So I’d say look out in particular for any potentially discriminatory criteria. For example, make sure that any pregnancy-related absences, including those related to pregnancy-related ill-heath, are excluded if attendance rates are included as a criterion in your redundancy selection matrix.

Also make sure employees who are on pregnancy-related sickness absence or on maternity leave aren’t left out of the redundancy consultation, which is an error we’ve seen come up in the caselaw a few times in the past. Hopefully modern technology means that it should be easier to include them in consultation meetings, for example using Teams to allow them to join consultation meetings remotely.

If there is a potential vacancy, must the employer offer it the employee?

Robert Shore: Zeba, another question for you from an employer. If there is a potential vacancy, are we, the employer, automatically obliged to offer it the employee, or is it sufficient to offer them an interview only without a guarantee that they’ll get the role at the end? [0:17:02.6]

Zeba Sayed: So as I mentioned before, where an employee is in a protected period, they have an automatic right to be offered a suitable alternative role if one is available. They shouldn’t be required to apply for the role. And this right applies even if there are other employees in the selection pool who are better qualified for the position. Of course, this might lead to resentment from employees in the pool who are not protected, and in that situation I would suggest that being open and transparent, explaining the reason behind any decision, and obviously your legal obligation towards an employee who is in the protected period, would help mitigate this.

Robert Shore: Yes. Good communication is key. So here’s another question. Stephen, what factors should be taken into account when deciding whether a vacancy is suitable? [0:17:48.8]

Stephen Simpson: So as Zeba has already mentioned, while the role doesn’t have to be an exact match there needs to be a close match in terms of skillset needed, as well as pay level and grading. Not just that, but also where the role is in the organisation’s hierarchy is important, i.e. status within the business. Geographical limitations will also often be a key consideration, and think about terms and conditions. A good example there is whether flexible working is possible, if they’re already working flexibly.

How should employers approach scoring an employee in a redundancy selection matrix if no recent events are available to score them on?

Robert Shore: Zeba, another question for you. How should employers approach scoring an employee in a redundancy selection matrix if they’ve already been on maternity leave for an extended period or have recently returned from maternity leave and so no recent events, such as their recent performance, are available to score them on? So how do you go about scoring somebody who has been absent for the very reason of maternity leave? [0:18:42.1]

Zeba Sayed: So any selection criteria should be objective and applied fairly, and in a way that doesn’t lead to discrimination. So if, for example, performance over the last 12 months is being scored and you have an employee in the selection pool who’s been on maternity leave during the last 12 months, that employee should be scored over a different 12-month period, so say, for example, 12 months before they started their maternity leave instead.

Similarly, if attendance is being scored, it follows that any period of maternity leave should be discounted. And just on this point, what the employer shouldn’t do is artificially inflate the score of a woman on maternity leave. There was a case a few years ago in the employment appeal tribunal called Eversheds and de Belin, and what happened in that case is that Eversheds decided that it was going to make one out of two employees redundant. One of the scoring criteria was the length of time each employee took to recover money from their clients. As the claimant’s colleague had been on maternity leave at the relevant time, she was awarded the maximum possible score in this area, and her total score ended up being higher than the claimant’s score, and the claimant, Mr de Balin, was made redundant.

In that case, the tribunal held that the different scoring method was unlawful sex discrimination and the claimant had been unfairly dismissed. The tribunal awarded the claimant three years’ loss of earnings, and the decision was subsequently upheld by the employment appeal tribunal. So do be careful that you don’t go beyond what’s necessary to rectify the disadvantage when you conduct a scoring exercise.

What counts as informing an employer of a pregnancy?

Robert Shore: Stephen, another question for you. With pregnant employees being protected from the point at which they inform their employer that they are pregnant, what counts as informing their employer? Do they have to put that in writing or is it enough if it’s said verbally to their line manager or to HR? What’s the process? What counts? [0:20:39.6]

Stephen Simpson: So, it’s really important to say that the employee does not have to have informed the employer in writing that they are pregnant. It can be verbally, which is important for employers to know, and this could actually be cause for a dispute in the future. I would not be surprised at all to see this being disputed at employment tribunals going forward.

What happens if there are more employees than alternative vacancies?

Robert Shore: So Zeba, if we are seeing more employees with special redundancy protection, what happens if employers have more protected employees than they have alternative vacancies for? Can they make the section process competitive from that point or is there hierarchy even within the protected group? [0:21:16.7]

Zeba Sayed: There’s nothing in the legislation that covers this situation specifically. And I suppose if faced with this scenario, employers will need to be pragmatic. One potential solution is to seek volunteers for redundancy. Alternatively, the employer could run a competitive process to select the best candidate from the pool of protected employees, and they could do this using an objective selection matrix or through an interview process.

Of course, there should also be open and transparent communication throughout the consultation period, and it makes sense to look for other roles that employees might be willing to take on, even if they’re not directly suitable.

What practical difference is made by the new law to restructures?

Robert Shore: Fantastic. So again, communication very important. Stephen, in light of the new law, employers planning for restructures — which obviously happens quite often — what practical difference is made by the new law? [0:22:07.8]

Stephen Simpson: I’d say the biggest difference in terms of planning will be the wider pool with special protection. The amended rules make it more difficult to identify all those with the special protection, so careful planning will be needed to make sure no one is missed.

We’ve provided a useful table in our quick reference resource type to help with this, as it has become definitely more complex to identify those with the special protection. So I’d urge employers to make sure that they record their plan, including how they have identified those with the extra protection, and what they have done to look for suitable alternative vacancies for them. I think that’s a really key message to leave people with.

What are the consequences for getting it wrong?

Robert Shore: Wonderful. Yes. And so one final question, and this one’s for Zeba. What are the consequences for an employer if it gets this wrong, for example if it fails to offer an available suitable alternative vacancy to a redundant employee who has special redundancy protection? [0:22:59.1]

Zeba Sayed: So, in those circumstances the dismissal is likely to be automatically unfair and the employee may also have a claim for discrimination. In both, automatic unfair dismissal and discrimination claims, the employee does not need to have two years’ service to pursue their claim, and any compensatory award would be uncapped. With this in mind, it would be a good idea to update any relevant policies and to ensure that all managers are trained on the changes, as falling foul of the new rules could lead to significant liabilities for an employer.

Robert Shore: Brilliant. I think that’s really important advice to end on. Update relevant policies. And of course, there are lots of supporting materials on our website to that end. I’ll put a link to those in the show notes.

And so finally, I’d just like to say thank you to Stephen and Zeba for your time today, and to say until next time.