Redundancy: case study - employee on maternity leave during redundancy process

Should Elsa be included in the pool for redundancy?

Yes. The way to approach this is to disregard her absence on maternity leave. If she would properly have been included in the pool had she been working normally - which she would have been, along with the other accounts clerks and the financial controller - then she should be included even though she is on leave. She does not have any special protection or immunity from consideration simply because she is not currently working.

The rumour that Elsa does not intend to come back to work should not influence the way in which she is treated. She may well have changed her mind and is not obliged to take steps to indicate whether she wishes to come back - or at least not until the end of her additional maternity leave.

Which selection criteria should be avoided?

Care needs to be taken over the criteria for identifying the potential candidates for redundancy. For example, if 'absence record' is to be a criterion, the following issues should be considered.

Less obviously, if 'training' or 'experience' is used as a criterion, and Elsa is marked down because she has been unable to attend a training session or to gain particular experience due to her absence on maternity leave, this could again amount to discrimination and render the dismissal unfair.

If 'length of service' is to be a criterion, then Elsa's whole period of employment should count, without reduction for any period on maternity leave. To do otherwise would again be sex discrimination and render any dismissal automatically unfair.

Should Elsa be included in the consultation process?

Yes. An employee on maternity leave should be given the same information and the same opportunity for consultation as she would have had had she not been on leave. It would amount to sex discrimination to exclude her from the process. However, consultation should be approached carefully. A heavily pregnant employee, or one who is sick for a pregnancy-related reason or who has recently given birth, should be treated sensitively and reasonable efforts should be made to adapt the procedure to enable her to take part.

In this case, Elsa should be informed of the situation in the same way as other members of the finance department. Her employer should take into account particular difficulties she may have, for example with arranging childcare, and the consultation process may need to be adapted (within reason) to ensure that she can participate fully. It may be appropriate, for example, to offer to hold meetings at her house or at a time of day convenient to her.

If Elsa does not want to come back, can she be offered voluntary redundancy instead?

This needs to be approached carefully. If the others are not offered the chance of voluntary redundancy, Elsa may assume that she is being treated differently for a reason related to pregnancy or maternity. If she does not want to make a deal, and is subsequently made redundant, she could well claim that the offer showed that her employer had already decided that it wanted her to go before it had gone through a full and proper redundancy process. An offer such as this could even amount to a constructive dismissal - a breach of the implied term of trust and confidence - entitling her to resign and sue.

Any offer that is made should be very carefully phrased and should be clearly stated to be 'without prejudice', which may (though not definitely) prevent Elsa referring to it in any legal action.

The new post of accounts manager

If the selection process results in Elsa being identified as a candidate for redundancy, she is entitled to be offered the new post of accounts manager if:

If the job is suitable and appropriate for her and she is not offered it, her dismissal will be automatically unfair. The maternity legislation therefore puts Elsa in a preferential position over other employees who have been selected for redundancy, even if they are better qualified for the position and even if there are good business reasons for the employer to prefer another candidate.

As regards the other employees who have been selected for redundancy, they should also be considered for any suitable alternative employment that is available. However, unlike Elsa, they do not have the absolute right to be offered such employment, since they are not on maternity leave.

What happens if Elsa does not accept the new position?

If it was suitable for her and she unreasonably refuses it, she will be dismissed by reason of redundancy and will lose her right to a redundancy payment. Whether the job is 'suitable' and whether Elsa is 'unreasonable' to refuse it are common sense questions rather than legal ones and will depend on the particular job and her personal circumstances.

What happens if Elsa is selected for redundancy and there is no vacancy that is suitable for her?

In this situation, she should be given notice of the termination of her employment in the same way as if she were working normally. Her employment then ends at the end of the notice period.

If Elsa is given notice, does she have to be paid for it?

Elsa is entitled to be paid during her notice period at the rate of her statutory maternity pay (SMP) or contractual maternity pay if she is still receiving this at that time. However, the position may be more complicated than this. She may be entitled to her normal wages, as opposed to maternity pay, during her notice period. This depends on what her contractual notice entitlement is.

If Elsa's contractual notice period is a week or more longer than her statutory notice entitlement (which is five weeks, as she has been employed for five years), she is entitled to only maternity pay during her notice period.

If, however, her contractual notice period is less than a week longer than her statutory notice entitlement, she is entitled to full pay for the statutory notice period. She will then be entitled to maternity pay for the remainder of the contractual notice period if she is entitled to it (note that the right to receive SMP survives the termination of the contract). This is the rather odd result of the Employment Rights Act 1996, sections 86-89, as confirmed by the Employment Appeal Tribunal in Scotts Company (UK) Ltd v Budd [2003] IRLR 145 EAT.

What is Joy's situation?

Joy, the employee recruited to cover for Elsa, does not have the right to complain of unfair dismissal because she has been employed for less than one year. She does, however, have protection under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002. This means that she should not be treated less favourably than a comparable permanent employee unless the less favourable treatment can be objectively justified.

Even if Joy's contract is terminated as part of the redundancy process purely because she is on a fixed-term contract, there is a good chance that this will be objectively justifiable.

However, the employer needs to be aware that it may be required to provide evidence to show justification.

Next week's article will be the first of a series on disability discrimination.

Kate Brittin is a member of the employment team at Lewis Silkin (Kate.Brittin@lewissilkin.com)

Further information on Lewis Silkin can be accessed at www.lewissilkin.com