[DAYS_LEFT] days left of your Medeconomics free trial

Subscribe now

Your free trial has expired

Subscribe now to access Medeconomics

Redundancy Guide Part 1: Preparation, the pool system, and selection of staff

Solicitor Jean Sapeta outlines the key points for practices when making staff redundant, in Part 1 of our comprehensive three-part series.

Make sure that the employees’ contractual documentation is up to date (Image: iStock)
Make sure that the employees’ contractual documentation is up to date (Image: iStock)

Practices are coming under increasing financial pressure as expenses rise, pay is frozen, and profitability is squeezed, so reducing staff overheads by cutting numbers is an obvious option.

But the financial, emotional and industrial relations cost of implementing redundancies can be considerable. The process for making employees redundant is tightly circumscribed by law, and is often not well understood by practice managers and GPs.

Is redundancy the only option?

Cutting the cost of staff can be achieved in a number of ways that fall short of redundancy. These can include redeployment of staff into different roles, restriction of overtime, cutting back on temporary staff (or using more of them), monitoring absences to achieve more productivity from existing staff, and changing employee terms and conditions. After following due process, these are all potentially helpful steps.

When does a reorganisation become a redundancy?

A redundancy situation can exist even when there is no financial crisis. Broadly, a redundancy situation arises in three circumstances:

  1. There is a closure of the business.
  2. There is a closure of the workplace.
  3. There is a diminished need for employees to do the available work.

In GP practices it is the final scenario – a reduced need for employees - which most frequently applies. 

What basic preparatory steps need to be taken?

  • Basic contractual documents need to be in place.
  • There is often no formal redundancy procedure in place.
  • Those who have to administer the process are often unsure of the legal requirements. 

The first step is to make sure that the employees’ contractual documentation is up to date, reflects current working arrangements, and is legally compliant with the statutory requirements - for example, about notice periods.

It is not necessary to have a formal redundancy procedure in place, but if one exists within the practice then it should be revisited to check whether it needs revision.

Those who have to deliver the restructuring also need to receive basic training.

Communication is key

Having taken the decision to reduce the number of staff, the first issue is how that process should be communicated.

Best practice is that consultation with employees takes place as early as possible.

Clear communication, on a regular basis, however delivered, is a key requirement. Long periods of silence will only worry staff and cause them to be preoccupied, and is also likely to be interpreted as meaning the worse case scenario will be implemented. 

This can have a negative effect on morale and productivity.  Most people in a redundancy situation will panic, simply because redundancy is a profound event for the individual. 

An early discussion, with the staff group and any employee representatives, enables the problem to be shared, and options to be explored.

Early discussions should include methods of avoiding dismissals, reducing the number of dismissals, and mitigating the effects where possible. Staff may be prepared to work together to offer different solutions, for example altering their working hours and patterns. 

When is consultation compulsory?

Consultation with employee representatives is compulsory where an employer proposes to dismiss as redundant 20 or more employees at one establishment over a period of 90 days or less. But most GP practices are unlikely to be facing that scale of change.

How do we decide on the ‘pool’?

Once it is clear that redundancies will be inevitable, then the GP partners, together with practice management, should decide who should be included in the pool of ‘at risk’ staff. Should the ‘pool’ be limited to the staff at one particular site? Or should the ‘pool’ extend across the practice to staff carrying out functions at different sites?

It is important to identify what kind of work is disappearing, and which location/establishment will be affected. Different practice sites could operate as different ‘establishments’.

Relevant factors are likely to be: the extent to which employees are doing similar work; the extent to which employees jobs are interchangeable; whether a selection pool can be agreed with staff representatives or employees themselves.

Although drawing the pool widely would be potentially unsettling for more employees, and have a knock-on effect on morale, that should be balanced against the risk of challenge from an employee who says that s/he should be pooled with employees across a wider pool with interchangeable skills.

There should be clear records kept of why the particular pool was chosen.

How do we choose people from the pool?

It is good employment practice for the employer to seek volunteers for redundancy in the first instance.

It is not obligatory to accept volunteers but if the volunteers are acceptable, this can avoid the need for compulsory redundancies, shortening the process, with a less demoralising and disruptive effect on the team.

The down side of seeking volunteers is that employees who volunteer and are not selected may have a potentially negative reaction.

When considering volunteers, the practice should look at the remaining skills and experience, and any imbalance which may be created by accepting those who volunteer and any potential negative effect on the efficient operation of the practice.

If those who volunteer are the most highly performing and highly valued, it would be perverse to accept such volunteers. 

What selection criteria are acceptable for redundancy?

Once the ‘pool’ has been selected, there should be an application of objective, fair and consistent criteria for selection, which are not discriminatory. It is unwise to choose the most irritating or challenging employee for redundancy. 

Selection of employees on the grounds of sex, marital status, race or disability, sexual orientation, age or religion or belief is unlawful. Care must be taken not to indirectly discriminate, for example selecting part-timers for redundancy may amount to indirect discrimination against women. If new shift patterns are to be introduced, for example, then if part-timers are to be selected, the employer would have to show that it was not practicable to fit part-timers into a revised shift pattern.

Selection of women for redundancy on the grounds of pregnancy would be automatically unfair and open the way to a very expensive sex discrimination claim.

What objective selection criteria can be used?

These include:

  • Skills and experience.
  • Standard of work performance (providing that reasonable objective records already exist).
  • Attendance records.
  • Disciplinary records.

If ‘performance’ is to be used as selection criteria there needs to be objective evidence to support selection on that basis – for example in appraisal documentation. Whatever records are used, they must be up to date and accurate.

If poor attendance is to be used as a criterion, the reasons for the extent of any absence must be considered. Absences relating directly to an employee’s disability should be entirely discounted when using attendance as a selection criterion.

Once the criteria have been drawn up, they must be carefully applied. There needs to be a comparative analysis of the relevant information. The need to make reasonable adjustments for disabled employees must always be born in mind.

Redundancy Guide Part 2: Breaking the news, maternity leave, and alternative employment

Redundancy Guide Part 3: Calculating payments, the notice period, and managing the aftermath

  • Jean Sapeta is head of London employment at specialist healthcare solicitors Hempsons

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.

Database of GP Fees

Latest Jobs