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Redundancy and reorganisation

This guide for RCN members outlines the duties placed on the employer, and your rights, when faced with a reorganisation or redundancy situation.


A redundancy situation

A redundancy situation may occur:

  • when there is a closure of business or workplace
  • when the requirements for  employees to carry out work of a particular kind have, or are expected to, cease or diminish
  • following a reorganisation or restructure.

A reorganisation is generally not a redundancy situation although it may lead to a change in terms and conditions of employment.

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Meetings with your employer

Meaningful consultation is an essential part of any reorganisation or redundancy process. Failure to consult with employees may make any subsequent dismissals unfair and in certain circumstances lead to a claim to an employment tribunal for compensation.

Individual consultation is recommended in all cases of redundancy. Your employer should explain why the redundancies are necessary and if there are any alternatives.

Collective or group consultation is only a statutory requirement where there are at least 20 staff to be made redundant. The consequences of failing to consult may result in a protective award of up to 90 days pay to all affected staff.

Please read our ‘Redundancy and reorganisation: one-to-one meeting checklist'.

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Right to representation

It is good practice for employers to offer employees the right to be accompanied to one to one meetings where they are proposing service reconfiguration, redundancies or transfers. However, there is no automatic right to accompaniment or for trade union representation.

Remember, to have our support, you need to be in membership at the time of the notification of reconfiguration, redundancy or transfer. 

Please read our 'Redundancy and reorganisation: one-to-one meeting checklist' and members can call us for advice on 0345 772 6100.

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Redeployment

As part of a redundancy process, organisations are required to take reasonable steps to redeploy any at risk employees to 'suitable alternative employment'. There is no obligation to create new vacancies.

At risk employees should be considered for vacancies in preference to external candidates or other employees who are not at risk.

In some cases, it will be clear that the at risk employee is suitable for a vacancy. If they are the only suitable at risk candidate the role can be offered without any formal assessment.

In other cases, a selection or assessment process may be required. This recruitment process must be a fair one.

Whether an alternative role is ‘suitable alternative employment’ depends upon a number of factors, including:

  • pay
  • status
  • capability
  • qualifications
  • location
  • working environment
  • hours of work
  • terms and conditions
  • nature and content of the role.

Rebanding

Redeployment may involve rebanding. In most cases when we speak about rebanding we refer to situations where the pay band of an employee is reduced. In some cases it can be that posts are ‘rebanded’ upwards, however this is quite rare. The exercise is often described by employers as a ‘skill mix review’ although it is most likely to be a review of ‘tasks’ rather than ‘skills’. During consultation and any service reconfiguration there should be clinical risk assessments and a clear rationale for the proposed changes resulting from any skill mix reviews.

The Job Evaluation Handbook (2013) outlines the banding review process and good practice in relation to review requests in the NHS. In the event that groups of staff or an individual is dissatisfied with the result of matching, they may request a rematch by a panel with the majority of its members different from the previous panel. You should also check any local policies for more detail.

If you are likely to be rebanded, please read our ‘Redundancy and reorganisation: one-to-one meeting checklist'.

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Unreasonably refusing ‘suitable alternative’ employment

If you unreasonably refuse an offer of ‘suitable alternative’ employment, you will not be eligible for a redundancy payment. You should not turn down an offer without taking advice from us. We recommend that you also read your employer’s organisational change policy and if you are employed in the NHS under Agenda for Change terms and conditions, you should also check the NHS Agenda for Change terms and conditions of service handbook section 16.17 to 16.19.

An offer of suitable alternative work should be made to you prior to the expiry of your notice period. The offer should outline how the new employment differs from the old (including pay, hours of work, location, and working environment) and give details of the start date. It may also provide a trial period. This trial period is mandatory when the offer of alternative employment differs from the existing job. By law, the trial period must be four weeks and this can only be extended in very limited circumstances. You must always seek advice from us before accepting any 'extended' trial periods as you could be deemed to have accepted a variation of your contract and lose any protection and redundancy payment.

Call us immediately (before the end of the four week trial period) on 0345 772 6100 if you wish to challenge the redeployment. If you can successfully argue that the offer of alternative employment is not suitable, then you will still receive redundancy pay if you are made redundant. If there is no suitable alternative work available and you cannot be redeployed, you should be made redundant.

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Redeployment and pay protection

If you are redeployed into another role your pay may be affected. However, as pay is one of the determining factors in whether you have been offered suitable alternative work it is likely that your pay will be protected for a specified period of time.

If you work within the NHS, Annex O of the NHS Agenda for Change terms and conditions of service handbook states that pay protection is agreed locally.

If you are employed outside of the NHS pay protection will be in accordance with your contract of employment, local policy, and negotiation. If you are concerned about how your employer is handling the process call us for advice.

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Transferring to another employer (TUPE)

If your employer is changing from one service provider to another, your existing employment contract could be protected under the Transfer of Undertakings (Protection of Employment) Regulations 2006, as amended by the Collective Redundancies and Transfer of Undertaking (Protection of Employment) (Amendment) Regulations 2014, known as ‘TUPE’. Read more about TUPE.

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Redundancy

If you have been told that you are being made redundant it is important that you:

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A fair redundancy process

The employer has to select fairly for redundancy. Your employer should:

  • identify the ‘pool for selection’ of at risk staff
  • identify the selection criteria for redundancy
  • establish an appeals process for staff.

Where possible the above should be with the agreement of local trade unions.

The existence of objective selection criteria should ensure that employees are not unfairly selected for redundancy. Any framework should be transparent, consistent and objective in terms of both the criteria and its application. Once any selection pool has been identified, each employee within the pool should be scored against the carefully chosen selection criteria. The lowest scorers within the selection pool may then be provisionally selected for redundancy.

Examples of selection criteria most commonly used by employers when selecting employees for redundancy are as follows:

  • attendance record
  • length of service
  • experience and capability performance
  • skills and knowledge
  • disciplinary record
  • ‘last in, first out’.

Whichever are chosen, they must be fair and consistently applied.

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Automatically unfair redundancy

The redundancy will be automatically unfair if any of the following reasons are used:

  • any reason relating to maternity leave, birth or pregnancy or any other family leave, paternity leave, parental or dependant's leave
  • your age, disability, gender reassignment, marriage or civil partnership, race, religion or belief, sex or sexual orientation
  • as a result of a TUPE transfer pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006 or The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014
  • your membership or non-membership of a trade union
  • you are exercising your statutory rights (for example, asking for a written statement of employment particulars)
  • whistleblowing
  • taking part in lawful industrial action lasting 12 weeks or less
  • taking action on health and safety grounds
  • undertaking jury service.

If you feel that your employer has selected you unfairly you should appeal against the decision using your local appeals process. You may be able to make a claim to an employment tribunal for unfair dismissal and possibly unlawful discrimination. Call us to discuss your situation.

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Redundancy pay

Your employer should calculate your redundancy pay for you. You should check your contract of employment and terms and conditions which will identify any contractual redundancy arrangements. If you are not entitled to contractual redundancy pay you may be eligible for statutory redundancy pay.

For NHS staff, the calculations are outlined in section 16 of the Agenda for Change terms and conditions of service handbook.

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Tax and National Insurance

Redundancy pay is a payment for the loss of your job and is not classed as wages. Under the Income Tax (Earnings and Pensions Act 2003) such redundancy payments are tax-free up to the first £30,000. Over this amount you will pay tax at your normal tax rate. This applies to both contractual and statutory redundancy pay. National Insurance is currently not paid on redundancy pay, even if the redundancy pay exceeds £30,000.

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Notice and redundancy

The length of notice required should be specified in your contract or local policy, subject to statutory minimum notice periods.

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Voluntary redundancy

In an effort to minimise the number of compulsory redundancies, organisations may invite volunteers for redundancy. Alternatively, employees at risk of redundancy may choose to volunteer. There is no guarantee that an application for voluntary redundancy will be accepted. Your employer may still wish to undertake a selection process to ensure they do not lose invaluable skills or knowledge.

Before agreeing to volunteer, always ensure that your redundancy package is calculated correctly and that your employer will give you a letter confirming you are redundant, should your application be accepted. Please call us if you would like to discuss this further or if you would like to obtain careers advice.

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Resignation and severance schemes

If you work in the NHS, please see section 20 of the NHS Agenda for Change terms and conditions of service handbook for more information about the mutually agreed resignation scheme (MARS).

The purpose of a severance scheme is to allow staff to leave voluntarily, therefore creating vacancies for those who may be at risk of redundancy. You are under no obligation to apply for such schemes and employers are under no obligation to agree severance just because someone has applied. Your employer cannot force you to resign under a severance scheme. This could amount to constructive dismissal. Severance schemes should not be used in a situation where your post is at risk of redundancy.

If you are working in the NHS and covered by Agenda for Change but choose to leave under a MARS, it is unlikely that the severance arrangements will match what you might have received had you been made redundant. If you accept voluntary resignation and then return to NHS employment shortly after, you will be expected to pay back some or all of your severance payment. Any amount of severance up to £30,000 should be tax free, but you must check the tax status of any such payment before making an agreement with the employer.

If you are resigning under a severance scheme, the arrangements of your settlement should be covered by a written settlement agreement. This should be checked by the RCN before you sign it. Please contact us to discuss this further.

Please note: if you leave under such a scheme, you have not been dismissed (you have resigned). This could affect any application for state unemployment benefits.

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Redundancy and moving on

Your employer must allow you reasonable time off work to look for another job or to make arrangements for re-training, provided you have been continuously employed for two years by the date your notice expires. There is no limit to how much time off is reasonable; this depends on your circumstances. Legally, your employer only has to pay you up to two-fifths of a week’s pay for this time off, although local policy may allow for more than this. If your local policy does not allow for more than two-fifths, any additional time off will be unpaid unless otherwise agreed. Your employer may allow you to work back the time on a different day, but they don’t have to do this. You may wish to consider taking annual leave rather than losing pay.

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Finding another job after being made redundant in the NHS

If you find another job outside the NHS this will not generally impact on your redundancy payment entitlement. You will only need to consider the notice period, which you may be obliged to work for your current employer.

If your new job is within the NHS and you start the job within four weeks of the termination of your contract, you may forfeit your redundancy pay. Please contact us for further advice.

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Need more advice?

Call RCN Direct on: 0345 772 6100