Chris Brunt is a Gibraltar employment lawyer, a Barrister and an Acting Solicitor who will consider all employee employment cases on a “no win no fee“ basis.
In this post, I will give a brief overview of the redundancy process in Gibraltar. In this post, I will give a brief overview of the redundancy process in Gibraltar.
I will briefly discuss qualifications for redundancy, then I will give a brief overview of the various statutory duties imposed on employers – I will highlight from a legal perspective what redundancy is – The need for redundancy to be fair – Show that the onus is on the employer to show that the redundancy was fair – What, and how a redundancy pool is selected? – How an employer fairly selects employees for dismissal from the redundancy pool and, – Employee’s redundancy criterion scoring discussions with the employee.
If you wish to discuss any matters in confidence please contact me for an initial discussion.
Qualification for Redundancy
For an employee to qualify for a redundancy payment they must have been continuously employed for more than one year (and must meet the legal definition of an employee). The employer will then calculate the statutory redundancy payment that an employee will receive, which is calculated with reference to the number of complete years the employee has worked, as well as their salary and age at the time of the redundancy.
The statutory redundancy payment is the amount an employee must be paid by law. Occasionally, an employer will increase the amount above the employee’s statutory entitlement in order to facilitate an ‘orderly’ redundancy and to extinguish any risk of an unfair dismissal claim against them in the employment tribunal, at which time the redundant employee will normally be expected to sign a settlement agreement on termination of their employment and which waives any future legal rights they have to bring a claim.
Duty of employer to consult employee representatives.
Gibraltar’s Employment Act section 76. (1) states that where an employer is proposing to dismiss as redundant five or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.
What is Redundancy
Businesses do, from time to time, unfortunately, cease trading and the company will be expected to pay redundancy money to those employees who have been employed for more than one year as set out in the Conditions of Employment (Redundancy Pay) Order 2001. The “Redundancy Pay Order” also sets out the calculations an employee is due for redundancy. The amount of statutory redundancy pay you are entitled to will depend on how long you have worked for your employer, your salary, and your age.
Probably more common in Gibraltar are businesses that restructure or downsize, and with this may come redundancies. Employers should try to keep staff redundancies to a minimum and only dismiss the employee for redundancy where no alternative to retaining them exists.
Is the redundancy fair?
If challenged in the Gibraltar Employment Tribunal, once the employee has proved that they were an employee and that they were dismissed (this is obviously not too difficult). Then the burden of proof shifts to the Employer to show the reason for the dismissal was for one of the 5 reason which allows for a fair dismissal. There are however several reasons why an employer can fairly dismiss an employee, which is discussed in other posts, suffice it to say that a genuine redundancy dismissal is potentially a fair reason for dismissal.
For the redundancy to be fair the employer has to follow a fair procedure, which I will discuss below.
First, let’s look at the law on redundancy dismissals as set out in Gibraltar’s Employment Act.
Onus on employer.
65. (1) “In determining for the purposes of sections 59 and 70 whether the dismissal of an employee was fair or unfair, it shall be for the employer to show–
(b) that it was a reason falling within the next following subsection, or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held.”
(2) In subsection (1)(b) the reference to a reason falling within this subsection is a reference to a reason which–
(c) was that the employee was redundant;
The Employment Act then goes on to set out exactly what redundancy is in section 65 (7) of the Employment Act
“any reference to redundancy or to being redundant shall be construed as a reference to the existence of one or other of the following–
(i) that the employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased, or intends to cease, to carry on that business; or
(ii) that the requirements of that business for employees to carry out work of a particular kind have ceased or diminished or are expected to cease or diminish.”
Therefore, for section 65 of the Employment Act to be engaged the proposed activity must fall within the definition of either one of the sub-paragraphs above.
What steps should a Gibraltar Employer take when ceasing business, or more likely when a re-organisation due to the legitimate business needs of the company is required, to ensure that any subsequent redundancy is fair?
Selecting the Redundancy Pool
Employers should, when considering redundancy for the purpose of restructuring or downsising a particular job role at threat, identify a group of employees who are considered at risk of redundancy. A redundancy pool in Gibraltar should include employees who are undertaking the same or similar roles, or with the same or similar skills in other roles
Employees dismissed due to redundancy often challenge the objective method of selecting the redundancy pool in the Employment Tribunal. Therefore, the employer must engage careful thought in advance to identify a suitable pool when redundancy (by reason of business re-organisation) is proposed, in order to ensure that any ensuing redundancy is fair and can be demonstrated to be fair. A significant number of challenges from employees in Gibraltar (with respect to the potential fairness of the redundancy pool selection) allege that the redundancy pool is too narrow, and should be widened to include others.
Consider that the employee is usually only entitled to challenge the employer on the basis that the redundancy selection process was unfair, or that the employer failed to find alternative employment for them within their organisation, as the Employment Tribunal will not generally speaking go behind the employer’s business decisions as to whether or not redundancy was or was not necessary, overall. That said if an employer created a sham redundancy situation in order to oust a particular employee, it is not unknown for such a challenge for unfair dismissal to be brought to the Employment Tribunal.
How are employees fairly selected for redundancy from the redundancy pool?
An employer would be best advised when considering redundancy in their organisation to ensure that they will give employees at risk (or, if relevant their Union) as much warning as possible in order to ensure that the relevant employees can take steps to understand the situation they face and to allow consideration to alternative employment in the organization, or elsewhere for that matter.
I will discuss Union involvement in the preliminary and later stages of consultation in a later post and will deal with non-union represented employees in this post for redundancies in a business downsizing or restructuring situation as opposed to total closure of a business.
The employer will compile a redundancy selection criterion and which will be applied equally across all employees in the redundancy pool. A non-exhaustive list of scoring criteria for example could contain the length of service, disciplinary record, timekeeping, appraisal history, skills, experience, and so on
The employer should then consult with the employee, a failure to consult would likely be considered unfair by the Gibraltar Employment Tribunal unless the tribunal concluded that a reasonable employer would have concluded that consultation in the circumstances was a completely futile exercise due to the individual circumstances of the case.
The purpose of the individual employee consultations is to afford an opportunity for both parties to discuss and attempt to find ways to avoid dismissal. by redundancy. A discussion could include the employee’s willingness or ability to work elsewhere in the organisation, perhaps reducing their hours. It will provide an opportunity for the employer to look elsewhere within the organisation to see whether or not there are other suitable roles for the employee. There will almost certainly be a follow-up consultation with the employee at a later date to provide feedback on the outcome of the earlier consultation process.
Discussing the selection criteria with employees
It is good practice to discuss individual scores with the employee to allow them the opportunity to make representations on the scoring. However, as the decision to dismiss is relative to the scores of other employees in the redundancy pool, this, it is submitted, has limited value. Perhaps it would be possible for an employer to consider whether or not anonymising scores would be suitable in certain circumstances.
Was the redundancy fair?
Any challenges to the employer’s choice of selection for redundancy from an employee selected for redundancy often centres around the employee’s contention that the method of selecting them for redundancy was unfair. The Employee will often challenge the methods of selection.
There are other requirements when the staff involved in the redundancy pool are union members, or when more than 5 members of staff are proposed to be made redundant in a Gibraltar establishment within 90 days see Section 76(1) of the Employment Act, and in what circumstances can a redundancy be automatically unfair, all of which I will discuss in a later post.
Chris is an Employment Law Barrister and Acting Solicitor of the Supreme Court of Gibraltar who specialises in employment law.
Are you an employer who requires advice on reducing your business’s exposure to an unfair dismissal claim for redundancy?
Or are you an employee who is at risk of redundancy or perhaps has been made redundant? Perhaps you want advice on whether the redundancy dismissal was fair, or wish to discuss your redundancy package.
Contact me for a free 30-minute consultation at Phillips Barristers & Solicitors, 292 Main Street, Gibraltar, GX11 1AA, on 200 73900. Or email me at chris.brunt@phillips.gi .
Disclaimer
All opinions are my own and are provided for information only and do not constitute legal advice. Please note that the information and any commentary on Gibraltar law contained in this article are provided free of charge for information purposes only. Every reasonable effort is made to make the information and commentary accurate and up to date, but I do not accept responsibility for its accuracy and or for any consequences of relying on it. The information and commentary do not, and are not intended to, amount to legal advice to any person on a specific case or matter. You are strongly advised to obtain specific, personal legal advice about your case or matter and not to rely on the information or comments on this site https://www.employmentlawgibraltar.com/
