Difficult decisions in difficult times: how should schools approach managing redundancies?

The last seven months have been some of the hardest ever faced by the independent schools sector. Whilst the Government’s Job Retention Scheme has supported jobs for a temporary period, all prudent boards of governors and senior leadership teams (SLTs) have inevitably been focused on re-evaluating their staffing needs in the light of reduced budgets and changed/restricted ways of delivering educational services.

In this article Adam McRae-Taylor explains what governors and senior leadership need to know about the process of restructuring and redundancy consultation.

What are the key provisions of employment law that schools must be aware of when carrying out a restructuring involving job cuts?

Any employees with more than two years of continuous service will be protected by both unfair dismissal and redundancy legislation. Compensatory awards for unfair dismissal can be up to the lower of 12 months’ remuneration or £88,519 which means it is vital that schools follow a fair process when making staff redundant.

There will need to be a thorough consultation process (see below) and governors/SLT must ensure that any redundancy selection criteria are not discriminatory e.g. a particular sex, age category or ethnic group should not be disproportionately affected.

What are the legal requirements when consulting with staff on redundancies?

Where 20 or more staff are at risk of dismissal within a 90 day period then the school will need to carry out a collective consultation with employee representatives for at least 30 days before issuing any notices of dismissal. Where 100 or more staff are at risk then the school will need to consult for at least 45 days.  It will also be necessary to notify the Secretary of State using an HR1 Form.

Whilst employees may sometimes feel that redundancy is a foregone conclusion, governors/SLT must approach the consultation with an open mind and consider all reasonable options which might reduce the number of compulsory redundancies. 

The consultation process should also incorporate individual consultation with those affected and those provisionally selected for dismissal should be offered any suitable alternative employment that might exist elsewhere in the school

What is the position with unions and at what point should they be involved?

If a recognised trade union exists and collective consultation is required (due to 20 or more jobs being at risk) then the consultation should be directly with the union representatives.

If there is no recognised trade union then the consultation would be with employee representatives elected by those staff at risk of redundancy.

It is sensible to involve unions/employee representatives as early as possible in the process.

What are the dos and don’ts that schools should follow in order to conduct the redundancy process as sensitively as possible, while ensuring they comply with the law?

A redundancy consultation is always a difficult time in any organisation. Schools will want to ensure they care for the wellbeing of their employees and conduct the process as sensitively as possible. 

Key principles include:

  • Transparency. Staff need to be convinced of the strategic/financial imperatives of the “business case”.  Governors/SLT should ideally prepare a briefing paper explaining the reasoning behind their restructuring proposals that persuades staff that difficult decisions are necessary.
  • Taking an appropriate amount of time.  Any attempt to rush through the process as quickly as legally possible can backfire and jeopardise goodwill and trust.
  • Genuine engagement in consultation meetings and openness to alternative proposals.
  • Offering support to those finding the process difficult e.g. through HR or an Employee Assistance Programme.

How much redundancy pay are staff entitled to?

Any staff who are made redundant will be entitled to a minimum of:

  • Their contractual notice (which must be a minimum of one week’s pay for each year of service up to a maximum of 12 weeks’ pay).  Notice can be worked or paid in lieu.  It will be subject to income tax and national insurance deductions in the normal way.
  • A tax free statutory redundancy payment of:
    • One and a half weeks’ pay* for each complete year of service in which the employee was aged 41 or over at the beginning of the year.
    • One week’s pay* for each complete year of service in which the employee was aged 22-40 at the beginning of the year.
    • Half a week’s pay* for each complete year of service in which the employee was under the age of 22 for any part of the year.

*A “week’s pay” for the purposes of a statutory redundancy payment is capped at £538 and a maximum of 20 years of service may be taken into account. This means that the maximum possible statutory redundancy payment is £16,140.

Some schools may choose to offer enhanced redundancy packages above the statutory minimum level where they can afford to do so (or if contractual enhanced redundancy arrangements are in place).  However, where the school is also a registered charity, governors should take care that any enhanced redundancy payments are in the overall interests of the school and could not be considered to amount to “golden goodbyes”.

Are there other options to redundancy?

Some staff may be open to agreeing alternative arrangements such as temporary career breaks, reduced hours or flexible working arrangements. There may be staff who would be interested in volunteering for redundancy, thus reducing the need for compulsory redundancies. Advice should be sought if the school would like to invite volunteers for redundancy. Schools may wish to explore these options with employees as part of the consultation process.

What about employees on furlough?

Employees who are still on furlough leave may be made redundant (the Job Retention Scheme will end on 31 October 2020 and it will be replaced by the less generous Job Support Scheme). A statutory redundancy payment cannot be claimed from HMRC but it is possible to claim notice pay for furloughed employees. The position on notice pay can be complex and it is will be important to take advice.  Independent schools should also be mindful of the reputational impact of claiming money from the Government for employees being made redundant.

What about staff absent from work on e.g. maternity leave, sick leave?

Staff who are absent from work by reason of family-related leave (maternity, paternity, shared parental leave) or sick leave should be consulted and kept up-to-date throughout the consultation process.

Special rules apply in particular to women on maternity leave who have a right to automatic protection in the event that only a limited number of suitable alternative roles are available after the restructure.

How do we consult when many of our staff are working remotely?

In these unusual times it is now common for consultation processes to be conducted virtually.  However, schools should take care that employee representatives and individual staff have the necessary technology to fully participate in an effective consultation.  It will also be important to ensure that staff receive copies of all the relevant paperwork.  It may be necessary to post certain documents to home addresses and personal email addresses may need to be used for staff on furlough leave.

How closely should governors be involved in this process, i.e. should they communicate directly with staff/unions? If so, how and how often?

The board of governors is ultimately responsible for delivery of the objectives of the school and should be involved in shaping and approving restructure proposals.

Whether or not the governors are directly involved in the consultation process will depend to some extent on the size of the school and whether it has a dedicated HR function. In a medium to large school it is likely that the SLT and line managers would carry out the consultation process but governors should still be visible e.g. the Chair of Governors might join the Head in the initial presentation to staff about why restructuring is necessary. Active engagement by governors is likely to engender a greater level of goodwill towards the school from staff affected by the restructuring process.

What sort of updates should the governors require from the Head and SLT? How often should these take place? Should the governors meet more often than usual while this process is going on?

The governors should ensure they are kept regularly informed of the progress of the redundancy consultation.  This is likely to require more frequent meetings and also potentially the establishment of a sub-committee to oversee the consultation process.  Note, however, that it remains the legal duty of every governor to ensure the restructure is carried out appropriately.

Final tips

In many ways the legal side is the easier part.  Good communication and an empathetic tone will be vital in order to convince staff that a restructure is truly needed if the school is to survive/thrive.  Governors and SLT should set this tone from the top.