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27 June 2018

House of Fraser announce plans to close more than half its stores: an employee’s guide to redundancy

6 mins

House of Fraser is the latest retailer to announce plans to close its stores. It is expected to close 39 of 51 stores, including its flagship Oxford Street store in Central London. The closures will mean that 2,000 employees of House of Fraser and 4,000 employees in brand and concession roles are set to be made redundant.

2018 has seen many retailers close a number of stores in an effort to stay alive. So far this year, Maplin and Toys R Us have closed down completely and businesses including Carpetright, Prezzo, Mothercare, New look, Poundworld and Marks and Spencer have announced and/or taken steps towards closing many of their high street stores. This trend, indicative of the collapse of the high street, places thousands of jobs at risk. It is therefore crucial that affected employees are aware of their rights and what their employer’s obligations are.

Bindmans’ Employment and Professional Discipline solicitors are leading experts in advising on redundancy. The team is well placed to advise a wide range of employees on the redundancy process including on payments and on potential legal claims arising out of the redundancy.

What are my employer’s obligations?

  • Collective consultation:

When 20-99 employees are being made redundant over a period of 90 days or less, your employer has a duty to inform and consult appropriate employee representatives at least 30 days before the first dismissal takes place.

When 100 or more employees are being made redundant over a period of 90 days or less, your employer has a duty to inform and consult appropriate employee representatives at least 45 days before the first dismissal takes place.

During this time your employer should be exploring ways of avoiding dismissals, reducing the number of dismissals and mitigating the consequences of those dismissals. The consultation period must have ended before your employer gives notice of dismissal to the affected employees.

Individual consultation:

 Collective consultation does not preclude the right to be individually consulted. The employees concerned must also be consulted on a one to one basis or via group meetings and can be given the right to raise questions individually.

  • Fair selection:

 Your employer must fairly choose a pool of employees from which to select for redundancy. Your employer should then apply fair and objective selection criteria which should be discussed with the employees before. Your employer should also establish an appeals procedure. Large employers will be expected to take a more methodical approach in order to fairly justify employees’ redundancies. Additionally, public bodies must undertake “equality impact assessments” which looks at the impact of the redundancy procedure to ensure that particular groups of people are not unfairly disadvantaged.

Offer suitable alternative employment:

 Your employer must explore the possibility of offering suitable alternative employment for you and your colleagues. If you refuse suitable alternative employment you will not be entitled to a redundancy payment.

If your employer fails to meet these obligations it may give rise to legal claims in the Employment Tribunal.

What are my rights as an employee?

  • You have the right to be fully consulted.
  • You have the right not to be unfairly selected for redundancy.
  • You have a right to reasonable time off to look for work during the notice period.
  • You have the right to a four week “trial period” to see whether alternative employment is suitable.
  • You may have the right to a redundancy payment. See below.
  • You have the right to be given adequate notice. You are entitled to at least:
  1.  12 weeks’ notice if you’ve been employed for 12 years or more.
  2. One week’s notice for each year if you’ve been employed between two and 12 years.
  3. At least one week’s notice if you’ve been employed between one month and two years.

What can I do if I believe that the decision to make me redundant is unfair?

If your employer has not followed a fair redundancy procedure you may have a claim for unfair dismissal. Typically, this would be when you have not been properly consulted, when reasonable steps have not been taken to avoid or minimise the redundancy, for example, by offering suitable alternative employment or when the employer has not adopted and applied fair criteria for redundancy selection. Generally, you must have been employed for at least two years to make a claim on one of these grounds.

Discrimination issues

Additionally, you might have a claim for unfair dismissal by reason of discrimination if you believe you have been selected for redundancy by reason of your:

  • Age
  • Race
  • Gender
  • Religion
  • Disability
  • Pregnancy
  • Sexual orientation
  • Being a member of a trade union
  • Working part time or on a fixed-term contract

 In these instances you do not need to have been employed for over two years to make a claim for unfair dismissal.

You should note that selection for redundancy for reasons including pregnancy/child birth or whistleblowing are automatically unfair.

What is a settlement agreement?

A Settlement Agreement is an agreement between you and your employer usually upon termination of employment. The agreement will provide for you to receive a termination payment in return for agreeing not to pursue certain legal claims against your employer. Your employer must pay your legal costs in getting advice on the terms of the agreement.

What can I expect to receive by way of settlement?

If you have been employed for over two years you will be eligible for at least a statutory redundancy payment from your employer. This is calculated using a precise formula that is based on your age, the number of years of completed service and your gross weekly pay. Up to 20 years’ service can be counted and the maximum gross weekly pay amount is £508. The maximum amount that can be paid to you under the statutory scheme is £15,240. You may also be entitled to a more generous contractual redundancy pay which could be referred to in your contract of employment or your employee handbook.

You will only pay tax on payments received over £30,000. Tax and National Insurance are deductions as usual on other payments including payment in lieu of holiday and notice.

If your employer fails to pay you or if you do not agree with the amount you have 6 months from the date your employment ended to make a claim for payment in the Employment Tribunal.

If your employer has gone out of business you will still receive your statutory redundancy pay and any outstanding sums from the government.

How can we help you?

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