Austerity, redundancy and other measures

Redundancy iStock 000006411338XSmall 146x219What options do local authorities have beyond simple reductions in headcount? Bhavesh Prajapati explains.

Council cut-backs as part of on-going austerity measures inevitably put pressure on human resources departments. Compulsory redundancies often seem to be the best answer, but councils must be wary of the potential risks and unforeseen costs associated with Employment Tribunal claims which may arise as a result.

The legal implications for councils appear in a number of guises:

  • Discrimination: councils must ensure that no issues of discrimination arise which may fall foul of the Equality Act 2010. In particular, redundancy criteria relating to extended periods of absence may discriminate against those with disabilities or female staff who have taken maternity leave.
  • Lack of consultation: always bear in mind your consultation obligations when discussing redundancy with affected employees; redundancy of over 100 staff members must involve consultation starting no later than 45 days before the first dismissal – or 30 days, for less than 100 staff. Maintaining a close and open relationship with trade unions will be instrumental here.
  • Equal pay: any changes to job roles needed following redundancies will have to be re-evaluated to ensure they are in line with any Job Evaluation Scheme.

As a result, before resorting to compulsory redundancy it is worth considering the other practical options available to you:

  • Reduce non-compulsory staff – such as contractors or agency workers;
  • Freeze recruitment;
  • Change terms of conditions of  employees’ contracts including reduction of working hours, pay and benefits – beware though of the risks of unfair dismissal type claims when seeking to impose these necessary changes on staff and bear in mind the need to meaningfully consult beforehand.

Taken in context, other councils such as Bridgend Council have already tried to embrace cost savings by streamlining internal processes. Further significant savings will be achieved through collaborative projects, renegotiations and looking at transferring-out services to partner organisations. They aim to save almost £180,000 over the next four years by cutting overtime and sickness payments. More controversial measures have included freezing pay rises for all but the lowest paid.

Neath Port Talbot Council has so far avoided the need for compulsory redundancies by working effectively with the trade unions. Their collaborative approach has resulted in staff agreeing to forfeit up to half of their national pay award for 2014 despite ongoing existing freezes to their salaries. A driving force behind the pay sacrifice was the commitment by staff members and the council alike to protect the lowest paid staff, those with earnings of up to £21,000 pa, who provide predominantly vital frontline services. Consequently, by retaining this lower paid band of staff, who are predominantly female employees, the council has mitigated against any claims of gender discrimination had their jobs been selected for compulsory redundancy. In addition, around 200 employees opting for voluntary redundancy over the last two years has also assisted with saving money.

Therefore, redundancy is an option for councils in tough economic times. However, there are other equally efficient methods which fellow councils are opting for to keep people in work. Care must be taken when deciding how best to achieve costs savings; reducing headcount is not necessarily the starting point.

Bhavesh Prajapati is an Employment Solicitor at national law firm Weightmans.