Effective from January 2025, the Labour government’s application of value-added tax on fee-paying schools will be implemented.
Private schools are now reviewing ways to unburden their operational costs to absorb the levy, leading to parents’ growing concerns that they will be paying more money for a lesser service and potentially looking to send their children to alternative education providers.
To manage, some schools are already, among other things, making redundancies among their teaching staff.
However, school leadership teams must take care with how the redundancy process is carried out to avoid any employment-related claims being made against them.
What Does the Redundancy Process Entail?
While schools may seek to balance the books by lowering tuition fees, looking for cheaper suppliers, and/or cutting extracurricular costs, staffing takes the lion’s share of a school’s total expenditure, therefore making redundancies an inevitable topic of discussion during any senior management meetings.
Undeniably, schools will have members of their teaching staff who have two or more years of continuous service (Long-Service employees).
They will, therefore, have the right to not be unfairly dismissed.
While redundancy is a fair reason to dismiss, the test of fairness is measured against how the internal redundancy process is ultimately applied.
To help ensure this, any dismissal decision must be predicated on objective criteria to identify an appropriate pool of employees to select for redundancy.
The process of establishing and implementing selection criteria can be highly challenging to get right, especially where there is the potential for committing acts of indirect discrimination and/or unfair dismissal.
Assuming that has been accomplished, the next challenge is to carry out consultations to warn and consult with those employees who have been marked as ‘at risk’ for redundancy.
A consultation is the opportunity for an employee to ‘stress-test’ their employer’s business case for placing them at risk of redundancy.
It is in those meetings where the common pitfalls lie.
It is, therefore, incumbent on the leadership team to be prepared to actively listen to their employees’ concerns, offer up other solutions than redundancy, and look for suitable alternative roles before a decision to dismiss can be made.
In the context of schools, it is likely that redundancies of 20 or more staff will occur.
As such, the redundancy process is complicated because, at that point, the statutory duty to collectively consult is activated.
Complicating matters further, most schools recognise a trade union and will be bound to follow the terms of the collective agreement they have signed.
Collective consultation is governed by the Trade Union Labour Relations (Consolidation) Act 1992 (TULCRA), and the statutory duties attached to it have been the subject of many Employment Tribunal claims.
It can be notoriously difficult to get right, and failing to do so can lead to a ‘protective award’ (i.e., 90 days’ gross pay per affected employee) being made against the school.
It is one of the most expensive penalties that an employer can face.
Indeed, it may be more appropriate to ask employees to volunteer for redundancies on more commercially favourable terms and then stagger any subsequent redundancies to avoid triggering the collective consultation process, but the effectiveness of this process depends on the facts at hand.
How Much Does It Cost to Make Someone Redundant?
While it depends on the particular circumstances, in most cases, it is not a cheap endeavour.
Each redundant employee will expect to receive their salary up to and including their date of termination, as well as their notice pay (if being dismissed in lieu of it) and for any accrued but untaken annual leave.
In addition, Long-Service employees will also be entitled to receive their statutory redundancy pay, which, under present legislation, can be up to a maximum of £21,000.
Alternatively, an employer can ask their employees if they would like to be made redundant on a voluntary basis.
However, this is naturally a more expensive course of action because employers need to incentivise their employees to accept it.
Therefore, voluntary exits are managed under enhanced settlement terms, which has its uses because (1) you can make it a condition precedent that the employee waives their right to bring any claims and (2) reduce the headcount in an attempt to avoid triggering collective consultation.
