Redundancy in a remote working world
31 August 2022
Remote first, remote only, hybrid working, employers of record…these arrangements are fast becoming normal especially as employers have competed for global talent over the past 18 months and sought to grow despite the great resignation. As the global economy continues to change, what happens if you now need to make redundancies in a remote working world?
Consultation, fair selection and searching for alternative employment are fundamental components of a fair and lawful redundancy exercise, but the relevant legal requirements were drafted without the new world of remote working in mind.
In this article we look at some emerging questions about remote working and redundancies, starting with more straightforward questions about redundancy selection before looking at tricky issues around collective consultation (where the legal provisions do not really work for remote working) and finally considering new issues thrown up by the emergence of new business models.
How to treat remote working when it comes to redundancy selection?
If you are choosing between employees in a redundancy selection exercise, you will need to establish a selection pool and criteria for selection (see our Inbrief guide to redundancy). Employers may increasingly need to select from a pool which includes remote workers.
Remote workers have no specifically-protected status, unlike part-time or fixed-term workers, but a selection approach which advantages office-based employees over remote workers might be indirect sex discrimination depending on the profile of your workforce. Remote workers can also bring unfair dismissal claims if selected unfairly (assuming they have the requisite two years’ service). In most cases, the fact that an employee works remotely should be a neutral factor. Selection criteria and assessment approach may need reviewing to ensure that they can be applied fairly to remote workers.
There may be tricky cases where some office attendance is genuinely advantageous, or where you will still need a minimum number of employees attending the office after you make redundancies. In such cases, you may need to factor remote working considerations into the selection exercise and this will need careful handling.
How to count remote workers when deciding if collective consultation obligations are triggered?
An employer that is proposing to dismiss at least 20 employees “at one establishment” in a 90-day period must consult with employee representatives and file form HR1 with the government (see our Inbrief guide to collective consultation for more details). An “establishment” is an EU concept meaning the unit to which employees are assigned. To which unit would a remote worker be assigned? The law is unclear on this issue. The legal provisions on collective redundancies do not really work in a remote working world. For example, part of the rationale behind the HR1 form was that it would be used by the government to notify local job centres about large-scale redundancies in their area, but this becomes less meaningful if those facing redundancy are actually scattered across the country.
In practice, there are three main options for remote workers:
1. Attach remote workers to a physical site and count them among the number of any redundancies proposed at that site. This is the best approach for remote workers who are operating out of that site in practice. There is limited caselaw about home-based workers, although there is one case about field staff working remotely (as sales representatives knocking on doors) where the Employment Appeal Tribunal found that the field staff were in practice assigned to local branches and should be included in the numbers of proposed redundancies for that branch.
2. Treat remote workers collectively as a single virtual establishment (or possibly even more than one establishment, where they can be subdivided). This may be the best option if there is no sensible link with a physical site, for example if your only site is a warehouse and you employ your entire “head office” on a remote basis. There is some caselaw supporting the idea that nationwide teams can be treated as a single “establishment” rather than atomised according to their physical location in cases where this better reflects how an employer actually organises its operations. By analogy, it may be better to regard remote workers separately rather than look for an artificial link to premises.
3. Regard remote workers as their own individual establishments. The word “establishment” tends to imply a physical location so arguably there is some logic to this approach. In reality, however, employment tribunals are likely to view this approach as a tactic to avoid triggering collective consultation obligations.
Ultimately, in the event of a dispute, it would be up to an employment tribunal to define the establishment. In the absence of a ruling in their case, employers will need to be pragmatic, bearing in mind that:
- When there is more than one sensible approach to counting proposed redundancies, an employment tribunal is more likely to choose the approach which means that collective consultation is triggered.
- Once an employer proposes 20 or more redundancies at one establishment, it must consult with representatives of any employees who may be affected by the proposed redundancies or by measures taken in connection with them. Remote workers may need to be included in the consultation as affected employees, whether or not they count towards the numbers of proposed redundancies. For example, suppose you are planning a restructuring of your team of analysts, some of whom work remotely, and you expect at least 20 job losses at one site. Even if the remote workers are not counted among the number of proposed redundancies at that site, they may nonetheless need to be consulted (through their representatives) as employees who are affected by the proposals.
How to elect employee representatives with a workforce who are working remotely?
If collective consultation obligations are triggered, employers will need to take steps towards facilitating the election of representatives if there are none in place already. The voting process is supposed to be secret so far as is reasonably practicable, so has historically been done with paper votes and a ballot box in the workplace. Secrecy can be a challenge if votes need to be cast electronically by remote workers. Some possible options for including remote workers are:
- Organise the elections over a timeframe within which the remote workers would be expected to visit the office where practical.
- Use a third-party provider, including an online voting platform, which ensures anonymity but may come at a cost. Examples of appropriate providers would include those organisations authorised to conduct ballots in the context of trade union recognition.
- Run a digital ballot yourselves. Strictly speaking this would not be a secret election because someone will have access to details about who cast which vote but we would hope that a tribunal would be prepared to support this approach, especially if you ask a manager or a regulated professional, such as an in-house lawyer or accountant, who is not involved in the process to take on the role of ballot organiser.
How to consult employees working remotely about redundancies?
You can consult employees remotely. After all, they are used to remote meetings. However, remote consultation involves the following extra considerations:
- How to communicate respectfully. P&O ferries and Missguided have both made the headlines recently for the way in which they made mass-redundancy announcements remotely, including over details such as automatically muting participants and the background used, as well as the manner of delivery.
- How secure your communication channels are, and where your employees are situated – e.g. are they in a café or co-working space? Discussions about restructuring and job losses often involve confidential information and you may need to be careful about what/how confidential information is communicated. You can instruct employees not to make a recording of consultation meetings (unless that is a reasonable adjustment) but in reality remote meetings are more easily recorded (as illustrated by the widespread publication of the P&O video recording) so you should be prepared for that eventuality.
- Your approach to companions. It is common practice to allow employees to be accompanied at redundancy consultation meetings by a colleague or trade union representative, although this is not a statutory right. If your policies allow this, how will this work for remote workers? In practice it will be difficult for you to ensure nobody else is present in the room in any case.
What is suitable alternative employment in a remote working world?
Employers have a duty to look for alternative employment for a redundant employee, including employment at other locations or within the same group of companies. As remote working becomes the norm, we may see more employees asking to be considered for a wider range of vacancies on the basis that they will work remotely rather than relocate. A refusal to allow a redundant employee to fill a vacancy on a remote working basis could, depending on the circumstances, affect the fairness of the dismissal.
If an employee “unreasonably” refuses an offer of “suitable” alternative employment, they lose their right to a statutory redundancy payment. It may be difficult to show that an office-based job was suitable for a remote worker or that a refusal to take an office-based job is unreasonable, although it will depend on the circumstances.
What about employers of record or professional employer organisations?
If you have an employee working remotely from overseas, then you may have engaged a specialist intermediary to employ them, sometimes known as an employer of record or professional employer organisation. If you no longer have work for the employee to do, it will generally be up to the employer of record, acting as their employer, to make them redundant. Local redundancy laws may apply. You should check the terms of your contract with the employer of record to see who is responsible for the costs.
Under UK law, employees engaged through an independent employer of record would have no rights to be pooled with your direct employees or to suitable alternative employment within your organisation.
However, employers of record would need to consider their own legal obligations if making redundancies. Those operating in the UK, for example, would need to consider their approach towards selection pools and collective consultation triggers across their employee population. Defining their “establishments” for collective consultation obligations will also be challenging, if all employees are working from home, for the reasons set out above.
We are starting to see new questions as companies try to meet legal obligations which were not designed for a world of remote working, let alone the emergence of new business models. The time may be ripe for a review of some of our legislative requirements and, in any event, caselaw may explore how the current laws should apply to remote workers. In the meantime, employers need to make pragmatic judgment calls.