The law and redundancy in the salon

Published 23rd Jul 2008 by sophieh
The law and redundancy in the salon

When times are hard redundancy can become a reality for many salons.

There is no legal requirement for salons to have a redundancy policy, but having one will give you a structured approach to managing the process, and ensure you select staff fairly and avoid claims of unfair dismissal.

If you find yourself having to cut your head count, you should obtain professional advice before you begin as employment law can be complex.

However, here are David Wright, legal advisor for habia and a variety of salons, responses to some of the most common questions on the subject.

My salon income has fallen by about 20% this year and I can see no option but to make at least two stylists redundant. What do I need to be aware of in terms of employment law?

Redundancy is defined as a dismissal in law and employees have the right to go to an employment tribunal if they consider they have been unfairly selected, or the process of their dismissal was unfair.

You should follow the process outlined in your disciplinary procedure in terms of the employee having the right to representation and the right to appeal against any dismissal.

In 1999, legislation was introduced outlining the expectations of employers regarding the process of consulting with staff before making any decisions on redundancies. If you employ more than 20 staff there is a minimum length of time for the consultation period.

If I make an employee redundant how much will it cost me?

This depends on the age and length of service of the employee selected. An employee needs two years' service before being entitled to a redundancy payment (but only one year to claim unfair dismissal).

A redundant employee would receive contractual notice, for example, one week's pay for each full year of service. In addition, the redundancy payment is calculated as follows.

  • Service between the ages of 16 and 21 - half a week's pay for each year of service
  • Service between the ages of 22 and 41 - one week's pay for each year of service
  • Service from the age of 41 and over - one-and-a-half weeks' pay for each year of service.

A maximum of 20 years' service is to be assessed. Surprisingly, in view of the age discrimination laws, older workers get a higher rate.

The employee receives their normal weekly rate of pay subject to a maximum of £330 a week.

Employers are at liberty to pay more if they wish. The redundancy lump sum payment is tax free up to £30,000.

Am I free to select which employee I wish to make redundant?

To some extent. Your selection process must not be discriminatory in terms of race, sex, age or disability.

However, selection based on merit is perfectly legitimate providing you have objective criteria.

It might be tempting to select last in first out, but this is likely to be unfair based on age.

Similarly, part-time workers are protected from discrimination and cannot be selected for redundancy simply because they are part-time.

How can I fairly select someone for redundancy?

You might ask for volunteers, but older workers with long service will receive a larger redundancy payment and may also have the skills you need for the business.

You might decide to consider first staff who have been disciplined or have poor attendance records.

However, many employers decide how many hours they require and what shifts need to be covered, then interview all the staff and fill the remaining posts based on merit. It is essential you have written selection criteria and keep accurate records of your decision.

How should I carry out the consultation with staff?

Firstly you must consult them as soon as redundancies are envisaged: you must not present employees with a final decision.

Remember, if there are more than 20 employees then there is a minimum 90-day consultation period. I would recommend the following:

  • Meet all the staff as a group and outline the salon's problems. Give them a period of time to go away and consider, then come to see you individually or collectively with their suggestions.
  • Recently a group of staff agreed to all reduce their hours and freeze their pay for 12 months rather than see one colleague made redundant, so fully consider employees' ideas - you might be surprised.
  • If redundancies remain inevitable, having completed your selection process you need to meet affected employees individually and give them the right to be accompanied. You must advise them of your decision and the reason for their selection. This is in effect a dismissal and the employee receives notice. They can be required to work their notice or be paid in lieu. Your decision needs to be confirmed in writing and the employee is advised of their right of appeal.

My receptionist is under notice of redundancy, but has now found a job. Does that mean I no longer have to pay her a redundancy payment?

No, if she is in her notice period and has been lucky enough to find alternative employment then she keeps her redundancy lump sum and it is her good fortune. 

 

sophieh

sophieh

Published 23rd Jul 2008

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