Jonathan Chamberlain: Good morning everyone. I would say I am delighted to see you all but obviously by the magic of Zoom I cannot. I am however delighted to introduce my partner Martin Chitty to present this webinar to you today. My name is Jonathan Chamberlain. My function is to chair which means to introduce Martin and to keep an eye on your questions. I think by now most of us are familiar with how Zoom webinars work but if you use another video platform then can I direct your attention to the Q&A button at the bottom of your screen. If you do have a question for Martin, please tap that in as soon as that occurs to you prompted by something that he says. Martin will not be taking questions as he goes along but he will be taking questions at the end. The idea is that he is going to speak for about 30 minutes so we are leaving 10 to 15 minutes for your questions which we will pick up then. So, our topic today is "Fire and Re‑Hire". I am not going to steal Martin's thunder by referring to the P&O episode but this is a topic which has been in the news very recently and I suspect the way the economic winds are blowing will continue to pop up in the news from time to time on an increasing basis. It is highly controversial. If you like that sort of thing it is highly entertaining as is Martin. So, Martin, over to you.
Martin Chitty: Jonathan, that is very kind and good morning everyone. I know from reading the list of delegates that there are a number of clients that I have worked with out there, there are even some former colleagues and it is always nice to welcome guests from other law firms who logged on to see what we have got to say and what we think about this. So, let us start by getting a couple of quick disclaimers out of the way. I am not going to talk solely about fire and re‑hire because that is just one of the arrows in the quiver, to use Mr Johnson's phrase. What I am really looking at here is the options open to you and the things you need to be thinking about when you are looking at reducing either capacity or headcount or cost because there is more than one way of doing that. So that is the first disclaimer which is that is what I am really talking about and the second disclaimer in all of this is that I profess no inside knowledge of what P&O did or did not do, I have not seen anything that you have not all seen in the press or the media but the one issue I think we ought to think about, and it is the same for all of us in all situations really and what you and we try and do when we are talking to businesses and to clients, is to identify the nature and extent of risk and the appetite for risk and therefore if the business you or we are going to take a particular path then we do it consciously and that is the issue that I think the P&O case teaches us and we will come back to that in due course.
So, as ever, we are going to have a bit of an agenda slide. Here is the agenda and the issues here I want to look at really divide into two parts. The first if you like are the context, what is our situation, what are we trying to do, what are the leavers that we are subject to. That might be urgency, it might be re‑structuring, it might be all hands to the pumps, no pun intended in terms of P&O of course. So there is context and there are the options, you know, what are the choices we have to consider and I want to stress this at the start, the options that you consider, it is not simply a case of identifying one path which you are then going to follow, although ultimately that is what you are going to do, but you need to consider what the alternatives to that path might be and why they do not see your purposes. Because as I will go on to talk about, if and when you get into collective consultation you have got to expect that this trade union movement or the staff side however they are represented, elected reps or not. I am going to be pushing back and say but what about this, what about this. So if you have not thought about those things you are going to be underprepared and if you are underprepared it is like anything else that increases the risk of it going wrong. So if you like the first two issues (a) are context and options and (b) the issues are time, risk and reward and by that I mean how long have we got, how urgent is this, do you want to take time doing it because the more time you take, the less risky the process should be, or do you want to take a more accelerated approach to all of this, a heightened risk but the reward from your point of view is a combination of time saving and that might be something as mundane as not spending the next several months locked in hand to hand combat with staff over the process and selection. It might mean that it is perfectly obvious to many people involved whether they personally are going to be impacted adversely by this so we save the time of them knowing it is going to happen and just waiting for the axe to fall. And the third limb of this, if you like, is the reward side of it and that is a slightly crass way of putting it. What I mean is this, what is the upside for the business of getting this done in a particular way. The upside might be time‑saving, it might be lower risk or it might be that there is a benefit to, you know if it has got to be done let us do it quickly which is how P&O decided to go about it.
And the issues there, if you take all of those, you know the risk, reward and time issues are the (b) issues if you like in ranking order so we have got (a) plus (b) and that equals (c) because those two sets of issues together then define what the process is that we are going to need to follow. So that is our agenda if you like and everything that I am going to talk about really relates back to those agenda issues in some way.
Let us have a look at options here and this is why I want to take it slightly wider than simply the question of pure, what I might call old school redundancy, which is something headcount because I think we have seen over the years, and Jonathan and I have been doing this a little while now, many of you will have seen the evolution of cost and capacity change over time. So if we wind back 20 or 30 years the knee jerk reaction almost, in a slightly unreconstructed way, was to go for headcount reduction and that could be classically either a place of work would shut or you would take out a particular service line or it might be that we reduce the number of people doing something. All of those are classically redundancy criteria and you will have come across them many times before. So redundancy works on the basis that you have fewer people, consequently the wage cost generally is reduced and you may or may not have the same amount of work being done and that really depends on how you configure the business going forward. And each of these options has a different set of variables in it from that point of view.
Fire and re‑hire I suppose as, as Jonathan says, a pretty politicised topic, there is talk of it being made unlawful. At the moment that is not the case, it is perfectly lawful. There are some risks attached to it which I will come back to later on. If you fire and re‑hire generally what you are doing is your retaining the total number of people in the business and the skillset, the collective wisdom and experience that all of those people have. You are retaining all of those people but you are looking to reduce the cost of their wages, the cost of employment them because you need them all to stay because you have still got the same amount of work to be done. So this is purely cost reduction as opposed to classic redundancy which is also about capacity reduction for the most part. And where we see fire and re‑hire most commonly used is in situations where businesses need to reduce an element or a proportion of their wage cost overall, normally where they are under tremendous pressure from customers or clients actually to reduce what they are charging and we have seen this a lot in outsourced public sector services for instance.
Now, replacement, what do I mean by that. That is the very antithesis of redundancy where we are not reducing the number of people, we are merely replacing them with others. So I will give you a live example of this: A couple of years ago we worked for a significant client of ours on an exercise where they went into consultation having already done one redundancy exercise on the indirect cost base on the white collar part of the business and they were looking at the manufacturing bases which was not in a position where it needed to reduce capacity but there was an interest from the client in reducing the cost and that was because their internal wage structure and grading structure automatically moved people through grading bands based solely on service rather than competence. Not unusual, particularly in manufacturing. So it is a very sort of old fashioned service based approach to the work. And what they looked at, and they went into open consultation with the union side on this, and a very experienced union at that, very sophisticated, and said okay, we would be interested in achieving a cost reduction and a slight reconfiguration of the workforce, the age demographic particularly, and we are prepared to fund some incentivisation of people if they want to leave and the unions reaction, and the client accepted this immediately. Which they then said right okay we are prepared to progress that with you but only if you commit to a like for like replacement of those staff members. So there is no overall reduction in jobs which is a win for the union but we are prepared to facilitate if our people are up for it in this process. What they did was agree upon an incentivised early retirement package in effect provided that people were then replaced and all of those people came from the agency pool of workers so they were known to the business and the upside for the union apart from retaining the total headcount was, whereas the agency workers generally are not union members, those who come up in full‑time staff generally do then join the union because historically the unions worked very effectively to protect that position. So we end up with the same number of people doing the same volume of work over time but at a reduced cost to the client. That was very effective, the numbers worked very happily and the whole exercise was self‑funding within two years.
Why do I mention part‑time, that does not look like redundancy and it is certainly not fire and re‑hire is it? No but it is an agreed variation to the pre‑existing work pattern, it results in the same number of people, best skills and experience being retained, it reduces the cost to the business albeit that it might result in less work actually being done although there are studies coming out, I am sure you have seen them as well, which indicates that people going to shorter working week can actually lead to an increase in productivity for hour worked, pure measure of productivity, so that the volume of work done is in fact the same overall and that is obviously advantageous to employers from that point of view.
The last one of these is a pure variation so this is the approach we would take before we get to fire and re‑hire which is simply to look to agree with people that we will change their working terms and conditions. It is not as aggressive as fire and re‑hire obviously, it is vastly preferable because it does not trash your employee relations or your industrial relations environment but hopefully you will achieve a reduction in cost from the business's point of view. So for all of those, these are alternatives which I would suggest you should be thinking about because, if you are not, staff side union certainly will be thinking about. And what we have seen over time, and certainly around the financial crisis of 2008, we saw a movement away from the pure redundancy approach of simply slashing headcount to a means of ensuring that the aggregate skills and experience within the business were retained at lesser cost so we saw lots of clients going onto a shorter working week and I think there is much more flexibility in terms of mind‑set overall on both sides, on the staff and on the management side, over time from that point of view.
So why are all these issues linked apart from the fundamentals of the fact that they are designed to reduce costs to some degree. Well, the real basis for that is legal, frankly that is why I am trying to tie them together, they all require engagement with staff plainly, they all require some degree of process and that might be a collective process (and we will come on to how and why that works) but there is also a requirement around individual process – whether it is consultation about individual selection for redundancy or whether it is a consultation process around a variation to contact. And the legal context for that, it is not just a "nice to have", it is necessary, there is an obligation to it, is that if you go above 20 people being dismissed through no fault of their own then you have to engage on a collective basis, that is either with the trade union if you have one or with elected employee reps if you do not. And that if you should have done it but do not, it can get very expensive because, as we will talk about later, that can incur a cost of 90 days' pay per person affected. So immediately if you should have done it but you did not, you incur a cost and that undermines some of the cost saving which you are trying to achieve through the variation or the redundancy process. And that of course all leaves aside questions of unfair dismissal, possible arguments around discrimination claims, and loss of management time. So all of these things are linked because all of them ultimately come down to that combination of risk and cost and these are the things which all of us in this session today are looking to either avoid entirely, minimise if we cannot avoid them completely or alternatively make a known decision so that we have got a measured degree of risk.
So what I am going to do next is talk a little bit about a quick recap. It is difficult in sessions like this to know exactly what the level of experience is in the room and I thought what I would do is divide this into two parts. So this is really another hour long webinar on its own which I will try and reduce to no more than five minutes, which is a quick recap about some of the do's and don'ts around collective consultation because if you are dealing with significant numbers of people it is almost certain, although it is not impossible, but it is almost certain that you will need to engage in some sort of collective consultation exercise. So these are the headlines, more information is available if you have a look at that website there is some background information there. So for those of you who have not needed to go through this previously, collective consultation is a numbers game and the numbers work in this way. If you have less than 20 people being made redundant at one establishment (I will come on to what that means in a minute) in a 90 day period then there is no obligation to consult collectively. However, if it is between 20 and 100 the obligation is to consult over a 30 day period before notice is given, important caveat there, and then if you go over 100 at one establishment the collective consultation period is 45 days. That used to be 90, it is not now, as it was reduced actually some time ago now, so it is now down to 45 days. So that is the starting point.
What are the issues which might drive how we look at that? Well the first is if it is pure redundancy, that is relatively straightforward, how many fewer people are we going to end up with is a broad measure. If however we are looking at something like a variation process we may not know how many people will leave so we may need to be cautious, at least consider carefully, at what the end game might be. And why I mentioned earlier that this is about dismissal where it is through no fault of the individual, it is impersonal if you like, classic redundancy is caught by collective consultation but so is dismissal where for instance we have not managed to agree a variation and we have no alternative other than to fire and re‑hire. And if we have not gone through a collective consultation process before then it is going to take us up to another 45 days plus notice period before we can do that effectively and safely without running the risk of a significant award.
So that is the pure numbers element. Obviously this depends on how many people are affected at each establishment and an establishment for these purposes, without going through all of the history of the Court cases all the way up to the European Court, is really about a place of work. Where do these people identify where they work. Now, if as a result of that you can say well overall we are looking to cut 101 people out of the workforce but there is no single place of work where more than 20 are likely to be affected then you will not be subject to collective consultation at all. So it is an important point to start digging down into the detail at a fairly early stage because it may be that you can short‑circuit the process and to give you an idea of how that might work. If at one extreme you have got a workforce working across lots and lots of sites where no more than 20 people are affected at any one site and the workforce has grown very quickly so you have got very few people with more than two years' service the consultation period may be very limited because it is individual only because nobody is at risk really of unfair dismissal claims or has an entitlement to redundancy pay. Whereas at the other extreme if you have got a single place of work where there are lots of people affected and they have all got more than two years' service you could be into a consultation period, followed by notice possibly and work notice where that could run up to at an extreme 150 days, if you have not already got a trade union base because you will need time to elect reps and that sort of thing. So the timing of all of this, this is one of our key variables, the timing of all of this, how we need to approach this, does vary considerably from case to case, situation to situation, and it is well worth spending a bit of time at the beginning working through this sort of exercise. It is surprising how often we find that there are ways of ensuring that, perfectly legitimately and properly, you could avoid the need to consult collectively although you may choose to do so because you are the type of organisation that will do that.
Now I have mentioned several times as part of this process that we have to talk to the trade unions or elected reps so the question then is, well do we have a choice? Well, no, we have got to do it, there is no choice there. We do not really have a choice about who we talk to either because if you have a recognised trade union then the obligation is to talk to them. You cannot talk to elected reps when there is already a union in place. That was the position at one time, it is certainly not these days, and has not been for nearly 20 years.
If you do not have a recognised trade union then you have to put in place some sort of representative group. Now, in some organisations you may already have some sort of employee forum. The risk there and the thing to go away and check at an early stage is whether they are properly mandated to talk about redundancy, some may be, lots will not be, and then whether the people who sit on that panel are actually from the affected group because if they are not then it is going to be inadequate. So you always have to think about putting reps in place and that may mean elections if there are too many volunteers. The process for that is very open, very flexible, there is no minimum number of reps, there is no fixed criteria on who they should represent, whether it should be by location, grade, and function and how it is to work. You can decide all of those things. There is an issue there about timing which I would mention, particularly at this time of year, and it is why generally speaking we do not see redundancy exercises in July and August, is that in non‑union organisations there the reps have to be elected, clearly those on holiday around school holidays are not going to be part of that process because they cannot stand and put themselves forward so you do need to think about that.
The other thing to think about is the length of notice. There is quite a formal and prescriptive process in terms of information to be provided to the union and to reps. There is also a form called an HR1 which if you do not file it you can be prosecuted for not doing so. Now five years ago, I do not suppose Jonathan or I would have seen that as a massive risk, I do not think we had ever seen an example of it happening in practice but more recently that has happened in a couple of high profile cases (albeit they have not really got to a conclusion at this point but do not put yourself in harm's way), do not put the organisation in harm's way by not filing an HR1.
The other thing to think about is that the obligation to engage in consultation may arise slightly earlier, indeed considerably earlier, than you might expect depending on the nature of the organisation. Under English law the obligation arises when the dismissals are proposed. Under European law it is slightly earlier, so for emanation to the state it would be when they are first contemplated. And as an example of both of those things if you like, if you go into a process of attempting to vary contracts by agreement but you know that if that cannot be done, if we cannot reduce wage costs in that way we will be making people redundant, then in effect that is already proposed so the obligation will have been triggered slightly earlier than you might have expected.
The last point on notice, and this does affect timing, is strictly speaking you cannot give notice to dismiss until the collective consultation has been concluded. It is possible then of course to make payments in lieu of notice or deal with it otherwise by agreement but in some circumstances, and you do need to think quite hard about this, you need to consider at the outset how you are going to deal with notice. Are you going to pay people in lieu, are you going to put them on garden leave, so the costs consequences of that are the same. Are you going to have them work? And of those options in my experience, having them work is the least attractive because people working out lengthy notice periods, particularly in a situation like redundancy, rarely works desperately well.
The other quick point to recap on fire and re‑hire is it is caught by Section 188 because if we get to the point where we dismiss and offer to re‑engage on different terms then it is a no fault based dismissal so we should have dealt with on a collective consultation basis so there will be instances, particularly if you want to save time, where you go into this making very clear that if an agreement cannot be reached voluntarily on a wage cost reduction you will be proceeding to dismiss and re‑engage and if you do not make that clear at the outset and you do not run through all the collective consultation steps you are going to have to stop and then start all over again which is going to elongate the process even more and defer the realisation of any cost saving.
Something to think about here as well is the potential for unfair dismissal claims. Now you will all know that where you have a situation like redundancy where people have got more than two years' employment they have a right to a redundancy payment and, if they do not like the process, they can claim unfair dismissal. The same arises in relation to fire and re‑hire type dismissals. Your defence to the claim for unfair dismissal is that you have got some other substantial reason which justifies the decision to dismiss. The fact is though that that is actually very difficult for an employer to satisfy because you have to show that but for getting the variation in place the company's very existence insolvency would have been challenged. So it is always an uphill struggle but it is still dependent on those with more than two years' service having the right to bring the unfair dismissal claim in the first place.
Now that has taken slightly longer than five minutes as it was always likely to but what I want to have a quick look at now are the more practical issues here in terms of the competing pressures to which you are subject.
If we go back to the opening of this which is, do you want to avoid being P&O? Maybe you do and rightly so, you may not want to attract all the adverse political and media attention and possibly brand damaging reaction that that had but it may be that you decide, however unattractive it looks at the outset, you are going to take a conscious decision which we will come on to. So the timing here is key, the question of whether there are immediate risks and how you want to go about the re‑structuring and realisation of costs saving is going to be driven by timing and the position in which the business finds itself.
There are reasons why you can avoid the obligation to consult collectively, these are what I call special circumstances defences, but they are absolutely a last resort. They are only really looked at positively by the tribunal where the company would otherwise go bust in the very short term and even then it is an uphill struggle to bring the argument in the tribunal. So if that is our only argument it is probably not a very good one but we should be going something rather than doing nothing. There is definitely an issue about the balance between risk and cost that I have talked about already and this risk if we do not go through adequate and proper collective consultation with a view to reaching agreement about terms of severance, about the rationale for this selection process etc. then we could be on the wrong end of a claim. And that claim is not, oh it could be 90 days how badly will it go, it is the other way around, it is a fine, it is a penalty. It starts at 90 days, it is then discounted by the tribunal if they think you did something rather than nothing but it is worth remembering when you are talking, particularly finance, to say okay but if we do it that way it could cost us 90 days' pay per person which unfortunately as I say undermines the proposition. I think in practical terms the implementation of business dislocation is a huge risk.
There are different ways of looking at this. If you are closing a plant then it might be that a clean cut‑off is always going to be the approach you would take. If you are going to take out a layer of management, it is probably best that it was done quickly and you can realise the change. If you are being selective in your redundancy, say you are reducing a particularly level or the workforce entirely by let us say 30% which is really very material, that is going to have a massive adverse impact on moral, motivation, attendance, productivity etc. So there are lots of reasons why you may want to foreshorten that and that is open to you to discuss with the reps as you proceed, particularly in terms of incentivising almost engagement because if you say to people well look, whoever goes will be then able to go with full notice pay without having to work a day of it there is some incentive to that. They are no worse off but you do not have to have them in the business and they do not have to put up with being marked men and women who everybody knows are about to leave albeit it is not their fault but they are still being dumped and the emotional reaction to that can be considerable.
I think reputation and brand damage are definitely things to consider but they are things which you might regard as tolerable. Query, and I have no insight on this as I say, what has been the long‑term brand damage to P&O out of all of this? Yes they acquired pariah status for a very short period but they are still loading cars and lorries as far as I know. The government's reaction and the shall we say attentive and zealous approach of the safety inspectorate to the new crewing arrangements meant in fact that the people really disadvantaged (and I will come back to this) by the process were people wanting to go on holiday by ferry at Easter because 45% of the ferry capacity out of Dover was not working. But undoubtedly you need to be prepared for some big and small "p" politics in all of this, local and national politicians in some circumstances will use it as an opportunity to get themselves some much needed publicity.
I have got a couple of more thoughts before we finish. There is always the question here of, are we going to do this by the book, which is lengthy consultation, lengthy individual consultation, notice being worked, etc. or are we going to do this by a bit more intelligent design. Are we going to contemplate looking to sweeten the approach here or take the risk that we might have to pay the price later? Those are commercial decisions for you but certainly they are issues to explore and by paying the price, if we do go back to stuff about P&O which is in the public domain, you will probably remember that there was outrage particularly about the way they chose to implement this, you know getting people together and then broadcasting their dismissal. You know, crass one might say not how any of us would think it ought to be done really but it was accompanied by an extremely generous severance package of about 200% of the most they could otherwise recover and within one week I think there was only one person who had not signed up to the deal of the about 800 people who were given notice. So maybe the design approach did work in the end.
But as I said, when we are dealing with a complete closure it is more straightforward although no less brutal than selective reduction. So it may be that you really want to think about which of those methods you want to adopt.
There is a question, this did come up in the P&O case, where almost the question was, and well this is just an outsourcing exercise. Are they not just passing over the crewing to a third party agency so why are they going about it in this way and sometimes you will need to think about whether that is in fact the underlying issue because there are wholly separate and different sets of obligations about collective consultation if that is what you are doing. You could work back from the end point and say well okay the worst possible scenario here is X, let us say we do not consult, we do down for 90 days' pay, we have still got notice pay and statutory redundancy pay, we cannot avoid that so the variables are unfair dismissal claims, absence of collective consultation. So the worst case scenario is (a) plus (b) plus (c) plus (d), all of those and then we discount that and we put forward some sort of package in place. The incalculable element of this is the political and brand damage and you will know more about how that will impact on your particular market than I can possibly say but it is in there and should be in your thinking.
So, the final two points. Could you pay your way out of trouble? Well the answer is yes and that is exactly what P&O did. I think they did that on a very calculated, pre‑determined and considered basis and you put in place settlement agreements which they did, that precludes any further claim, or does it. Well, settlement agreements preclude individual claims, we all know that, all sorts of individual claims, contractual and statutory etc. What settlement agreements do not do in situations like this is they do not deal with the unsettleable claims and what I mean by this is that there is not actually a mechanism short of ACAS conciliation after the event where you can pre‑agree to settle prospective claims for lack of collective consultation and that is the big ticket item so that is always a risk. There are ways of doing this. Jonathan and I have recently done a case involving the settlement of a quite complex industrial relations dispute and an outsourcing arrangement tied together where there were prospective claims for all sorts of absence of consultation but wording was agreed eventually. But the fact that you cannot use a settlement agreement for that makes it slightly more cumbersome.
The other thing to think about is that if you have gone into this honestly believing that you have planned it well, you have looked forward, you have done all the right things then putting forward a settlement agreement without any sort of incentive might look a bit weak and as though you are worried about claims being made or equally it might identify that the individuals should be pushing for a bit more money and people will do that and that is often the key to getting these things away.
So that was the end of what I have got to say. I am looking forward to your questions and I am going to hand back to Jonathan who is going to be asking them in his best Jeremy Paxman voice of course.
Jonathan: Some questions Martin thank you very much but hopefully none too Paxmanesque. So one question that has come up and we do get asked this quite a bit.
In a collective redundancy fire and re‑hire situation what are the employer's obligations in terms of training employee reps, do employers have to pay for them to get legal advice?
Martin: No they do not, there is no obligation to do that. Many people would say that that would be an excellent ides but there is no obligation to do that. What we have seen and what we do do in some cases is we will provide through people not dealing with the actual advisory part of the process. We will provide some training to reps because individuals in a non‑unionised environment who find themselves as reps and are actually I think in a very difficult position because they have been selected by their colleagues or have put themselves forward, one may question why they have done that but they have, they have put themselves forward, they have volunteered, they suddenly find themselves as the interface between management who are trying to push through a change agenda and their colleagues who at risk of losing their jobs. So they are unlikely to be able to satisfy everybody all the time and they may well feel pressured. So them understanding what their role is, what they can do and what they can ask for and which things they cannot ask for is actually very useful, to give them a context within which to work. Otherwise I think there is a danger of them just drowning. The other thing to think about is that although you as an employer do not have to pay for legal advice you do not have to provide training either, there is going to be a need to provide some sort of facility, probably easier these days using things like Zoom, for them to be able to cascade information down and take feedback from their people because that is part of their role. You are consulting with the reps not with the whole of the workforce on an individual basis during the collective phase so there is something to think about there and employers just saying well we are not going to help with that really does not get the job done and actually would undermine the process in my view and leave you at risk.
Jonathan: Thank you, one question that has just come in and I think relates to your last slide so it is definitely work picking up.
Just to confirm, are you saying that settlement agreements do not cover the failure to collectively consult?
Martin: That is my view. There is a process you can go through though, ACAS pre‑claim conciliation does seem to allow for it but it is not clearly expressed anywhere so there has always been a debate and continues to be a debate about that. It does mean that people do not do it. The way in practical terms is if an agreement has been reached with union endorsement after a period of consultation and they have signed off on it if you like, it is going to be difficult for them to backtrack on that and it is not a situation where individual employees can pursue a claim where they are disgruntled by the fact that they did not think the union did a good enough deal or the elected reps because the process does not require that everybody is happy, the process requires that you consulted through the relevant collective process and if you have done that and it has been agreed so much the better. It would be useful if the government got around to amending the relevant legislation to enable employers and unions and reps to be able to expressly agree that any prospective claim has, you know there are not any grounds for that in the same way that we do routinely with individual settlement agreements.
Jonathan: I just going to add by the way for what it is worth, it is my view as well and it is a very commonly held view amongst employment lawyers. It may be just a lacuna in the statutory drafting and in practice it does not often come up.
Martin: No, I would agree with that it does not often come up but sometimes when we are you know identifying risk that fact that oh it does not often come up or uh it might not happen and then we are the one in 1,000 case where it does, nobody is going to thank us for that. But the case that Jonathan and I which I was alluding to earlier recently dealt with, we did manage to reach an agreement with the union which from memory was covered as part of a pre‑claim conciliation process via ACAS. I do not think any of us questioned ACAS too hard about whether they got the capacity or jurisdiction to do that, they deemed happy with it and so did everybody else.
Jonathan: And it was a jolly good deal I seem to remember.
Martin: It was a jolly good deal for everybody.
Jonathan: Moving away from fire and re‑hire a moment and on to a more straightforward redundancy situation perhaps.
Is there an obligation on the employer to offer voluntary redundancy?
Martin: Right this is a question I should have picked up, my apologies. That is a sort of yes and no really because voluntary redundancy is still a form of redundancy. Generally speaking it is very worthwhile to see whether you can get people to go rather than having to select them if they are prepared to jump. So, does it meet the statutory criteria for avoiding a redundancy? I would say strictly speaking no but presentation makes a very good idea. It is something which unions generally will look for and on the staff side elected reps will look for it as well. It works best in my experience if people are incentivised to volunteer. They have got to be offered something or have the perception that they are getting something they would not get if they did not volunteer, otherwise why would they. The consequence of that can be that you do not always get the right people to volunteer. Every employer in every redundancy situation will have an idea of who they would like to lose I think if we are being candid about it within these four walls. So how do you incentivise the right people to go? Well, make it attractive and make sure that there are people policing the exit gate so that as an employer you can say, well you can apply but we decide whether you go or not so that we have some choice, we do not just lose the people, otherwise we face the situation where some will go, take the money but they are the ones who can most easily obtain alternative employment. They might be our better people rather than our less able people. On a selective redundancy exercise it tends to be those who are less able who lose out. They may still be perfectly competent but they are not as able as some of their colleagues. So a good idea, think about how you are going to incentivise people to do that.
Jonathan: Martin, we have got a cracker of a question here.
In a fire and re‑hire situation where changing terms and conditions is there any risk of unfair dismissal claims asking for re‑instatement on the old terms and condition.
Martin: Okay, Yes, I am sure you can identify who has asked that question and I will be asking for their contact details later. Well, there is that risk because if we think very logically we are dismissing and re‑engaging so a dismissal is still a dismissal. If the individual accepts the new offer then the re‑engagement is effective and I think in most circumstances that would preclude the possibility of a claim although there is an argument there. You could always put in place a settlement agreement to preclude that should you want to do so. If people put forward, if you dismiss an offer to re‑engage contemporaneously and they do not take it then plainly there is claim, if they have got more than two years' service it is for unfair dismissal, it then comes down to the strength of whether we had another substantial reason that justifies the dismissal, which I have said is difficult, but if they get through all of that then it is possible they could go for re‑instatement on their former terms. There may be lots of reasons why that would be unlikely in practice, especially confidence issues, and if the situation was as bad as the employer presented in terms of amassed business or a re‑engagement on lower terms it may not be feasible and the tribunal will have to look at that and if you have not convinced the tribunal of the merits of your argument you are going to lose anyway so re‑instatement is perfectly possible. It is certainly something which, I think we are seeing re‑instatement and re‑engagement pushed harder despite the general buoyancy of the job market. Generally that tends to happen when the job market is depressed when people cannot find alternative work easily and there are some other issues around orders for re‑instatement and re‑engagement which can make it attractive particularly where the employers may not want the individual to come back because there are enhanced claims that you can make although it is still open to the employer to decline the order provided they are prepared to pay the penalty and there is something I think in one of our recent briefings on some cases in that respect which are slightly counter‑intuitive in the way they have been decided and the awards that have been made.
Jonathan: Indeed and I think that brings us to our or just over our 11:45 end time. Thank you very much Martin, thank you all for attending. There is an electronic happy sheet to ask for your comments and feedback for which we would be hugely grateful if you would not mind spending a few seconds to fill them out and we look forward to seeing you on our next session.
Thank you very much indeed.
Martin: Thank you.