Learning lessons from Ryanair’s cancellation turbulence: Our Top 5 Tips for effective holiday planning

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Ryanair have recently hit the headlines for having to cancel flights over the next six weeks due to pilot shortages. Chief executive Michael O’Leary has admitted this has been caused, in his words, “because we’re giving pilots lots of holidays over the next four months. He went on to explain candidly ”What we have messed up is the allocation of holidays and trying to over allocate holidays during September and October, while we’re still running most of the summer schedule, and taking flight delays because of principally air traffic control and weather disruptions”   A spokeswoman for the budget airline said Ryanair is preparing for up to €20m in compensation claims, according to Reuters.

Here are our top tips for effectively managing holiday so as to avoid unanticipated problems and liabilities for your business.

1. Assess the needs of your business

At the start of your business year, assess your organisation’s staffing needs. How many employees do you need in place to cover your likely workload on a month on month basis?  Before agreeing individual holiday dates make sure you have enough staff in place as cover in order to avoid interruption to your business.  Consider whether you have any especially busy week when no one can have a holiday, such as summer holidays and Christmas? Consider overtime and organising extra staff to cover for these peak holiday periods if necessary.

2. Plan for peak holidays periods

For the majority of businesses, summer and Christmas represent the peak holiday periods.  Taking a summer holiday is traditionally popular. For employees with families and child care responsibilities, the school summer holidays represents the most likely period they want to take holiday.  How are you going to cover for this likely two week period? Many employees also tend to save up their holidays till the end of the year either insurance policy just in case something comes up at short notice requiring them to take time off work or because they want to take the Christmas period off. So what will happen at Christmas? Can everyone be off? Can no one be off?   Depending on the business sector you work in  the holiday peak period may be different. For example for Ryan Air, it appears to be just after the summer when pilots who have had to work over the busy summer period want to take holiday.

3. Consider shut downs

Consider shut downs. These are a useful tool for ensuring your workforce uses up its holiday entitlement during the current holiday year. Many companies shutdown for at Christmas for example as it is traditionally a quiet period. Other companies shut for a week or two during the summer for much the same reason to coincide with the bank holiday periods.

4. Monitor and Record Holiday Bookings

Your business needs to have in place a mechanism recording all staff holiday requests so that you can readily and properly assess if you can allow or decline a holiday request against the staffing needs of the business.  A holiday year planner, represents a simple and relatively inexpensive solution allowing you to record an individual employee’s holiday requests and allowing you  to see at a glance how much holiday who else is off that day in terms of assessing the needs of the business and how much holiday entitlement the applicant has left before agreeing it.  For larger organisations there is specialist HR software that can greatly assist with effective holiday planning.

5. Have an Annual Leave Policy

We recommend your business ought to have fair and comprehensive policy in place to ensure that staff understands the rules and procedures when it comes to taking annual leave entitlement and what is expected of them in applying for holiday.  This can be in the form of either a standalone policy or included as part of a raft of employment policies in the organisation’s staff handbook. Either the policy can be made available on request or included on the organisation’s intranet for easy access.

Final thoughts

Here at iiLaw we have over 20 years of experience advising employers in relation to holiday issues, including drafting holiday policies and procedures.  Please call the author of this article, Julian Cox who heads iLaw’s employment team to discuss on 0207 489 2059 or e-mail him at julian.cox@ilaw.co.uk to discuss.

 

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Top 10 strategies for employers handling redundancies

settle_your_differencesIntroduction

In order to remain commercially competitive it is important businesses review their staffing needs on a regular basis. Even where a business is successful, it is inevitable, that redeployment of labour and redundancies will sometimes be necessary based on prevailing market conditions. This is particularly true in the uncertain times in which we live as a result of Brexit. It is vital if you are considering reducing staff head count due to the prevailing economic circumstances that such redundancies are handled carefully to avoid unanticipated liabilities for your organisation.

Here at iLaw we have over 20 years’ of experience guiding employers through redundancy processes. Here are our top ten tips for employers faced with having to make what we understand and appreciate are difficult decisions:

1. Avoid having to make redundancies in the first place

Developing an effective strategy for human resource planning can help manage current and long term staff needs and avoid the need to make redundancies.

2. Make sure there are good grounds for making redundancies

Even if an organisation has an effective HR strategy in place, sometimes having to make redundancies is inevitable. It is important when considering making redundancies that you are able to justify the grounds as a matter to law to avoid claims for unfair dismissal.

According to the Employment Rights Act 1996 a redundancy situation arises when:

  • the employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was so employed; or
  • the employer has ceased, or intends to cease, to carry on the business in the place where the employee was so employed; or
  • the requirements of the business for employees to carry out work of a particular kind has ceased or diminished or are expected to cease or diminish; or
  • the requirements of the business for the employees to carry out work of a particular kind, in the place where they were so employed, has ceased or diminished or are expected to cease or diminish.

3. Adopt a fair selection criterion

The selection criteria for making an individual employee redundant should be fair, objective and consistent. By ensuring this,  this avoids any suggestion the employee has been unfairly selected for redundancy.

As far as possible, objective criteria, precisely defined and capable of being applied in an independent way, should be used. The purpose of having objective criteria is to ensure that employees are not unfairly selected for redundancy. Examples of such a compulsory criteria are:

  • Skills or experience;
  • Standard of work performance or aptitude for work;
  • Attendance or disciplinary record.

4. Make sure in applying the selection criteria it is not tainted by discrimination

The chosen criteria must be consistently applied by all employers irrespective of size. The employer should also ensure that in applying the criteria their decision making is not tainted by discrimination in any way e.g. disability in the context of work attendance and age in the context of experience (the argument being younger employees may have less experience by virtue of their age but that does not mean they do not have the skills and capabilities to do the job in question).

5. Consider voluntary redundancies

One acceptable method in terms of a non-compulsory selection criteria is for employees to volunteer to be considered for redundancy and for the employer to select from the list of volunteers those employees who are to be dismissed.

This has the advantage of avoiding the need for compulsory redundancies, with a less demoralising and disruptive effect on the workforce. It is not uncommon to offer enhanced redundancy payments as an incentive to attract people to leave. In situations where the number of volunteers exceeds requirements, employers should be alert to the potential reaction of some employees not selected and consider in advance how best to deal with this.

The disadvantage of going down the voluntary redundancy route is that sometimes those volunteering for redundancy may be the employees with the superior skills and capabilities (as a result of which they are more confident of obtaining alternative employment) and therefore the ones the employer would prefer to retain.

6. Follow a fair redundancy procedure

Put into place an effective redundancy policy that sets out the redundancy process step by step. This will help employees understand the procedure that will be followed before it takes place. It also provides employers with the structure and framework to be followed. Fair and appropriate procedures need to be followed to avoid unanticipated liabilities for unfair dismissal even where there are good grounds for making a redundancy.

The essence of a fair redundancy procedure established by UK employment case law is:

  • Warning;
  • Consultation; and
  • Notice

Dealing with each of these three limbs in turn:

7. Warning

The employer should meet with the employee and give them warning that their role has been POTENTALLY identified for redundancy explaining the underlying grounds. It is just that, that the role is potentially redundant. It is important at this stage not to say anything that would suggest the employer has made the decision to make the position redundant terminate the employee’s employment. To do so would risk prejudicing the entire consultation process rendering the dismissal potentially unfair and opening the employer to a claim.

The employer should follow up the meeting with a letter to the employee confirming the following:

  • The reasons for having to make redundancies; and
  • Stating the employee’s role has been identified as a result as being potentially redundant; and
  • Explaining the consultation process that will follow with dates for the next meeting to take place as part of that process.

8. Consultation

Consultation should take place as soon as possible following the initial meeting at which warning of potential redundancy is given. The purpose of consultation is for both sides to explore the available options. It presents an opportunity for the employee to pitch ideas as to how the redundancy can be avoided. For the employer it presents an opportunity to listen to such ideas as well as to identify whether there is a suitable alternative role for the affected employee(s), so as to avoid having to give notice of termination of employment at the end of the consultation period.

NB employers who propose to dismiss as redundant 20 or more employees at one establishment over a period of 90 days or less have a statutory duty to consult representatives of any recognised independent trade union, or if no trade union is recognised, other elected employees. This is in addition to the employer’s obligations to consult individually with the employees.

9. Notice

At the end of the consultation period (and not before), if employer and employee have not been able to identify a way of avoiding the redundancy crystallising or suitable alternative employment for the employee then the employer should meet with the employee again to confirm the redundancy is confirmed and give notice of termination of employment. The employer should follow up the meeting with a letter confirming in writing the following:

  • Confirmation of the redundancy; and
  • The planned date for termination of employment; and
  • The employee’s entitlement to a redundancy payment whether under statute (assuming the employee meets the 2 year qualifying criteria for such a payment) or under the employer’s redundancy policy if it includes provision for an enhanced redundancy payment; and
  • The employee’s contractual entitlements on termination of employment including (but not limited to) the following elements:
  • Notice or payment in lieu of notice if the employer does not want the employee to work their notice period; and
  • Accrued but untaken holiday entitlement due up to the date of termination of employment; and
  • Any commission earnt or bonus due on termination in accordance with the employer’s scheme rules

This list is not intended to be exhaustive.  You should refer to the employee’s contract of employment to check the full extent of the financial entitlements due on termination of employment.

10. Consider offering a settlement agreement

Settlement agreements offer employers a clean and effective means of dealing an employee being made redundant providing protection against the employee seeking to claim they have been unfairly dismissed following termination of employment. Typically the employee is offered an enhanced redundancy payment in return for waiving any legal claims they may have against their employer arising out of their employment and its termination. For more about settlement agreements take a look at our article Settlement agreements: 5 top strategies and tips for employers.

Final thoughts

Handled properly, following the tips contained in this article, a redundancy process need not be so daunting for an employer. Are you facing a redundancy situation with your workforce? Why not talk to our dedicated team of employment lawyers here at iLaw?  We can help guide you through the exercise so that it runs smoothly and does not leave you open to the exposure of litigation from affected employees.

Please call the author of this article, Julian Cox who heads iLaw’s employment team to discuss on 0207 489 2059 or e mail him at julian.cox@ilaw.co.uk.

 

 

Settlement agreements: 5 top strategies and tips for employers

ilaw-landing-page-banner-bg-img1Introduction

 With Brexit continuing to cause economic uncertainty in the UK, it is inevitable that some employers are now looking at re-organising and reducing staffing levels. As part of this process businesses often offer departing employees a settlement agreement as a means of protecting themselves from potential litigation arising out of the employees’ employment and its termination.

A settlement agreement (previously called a compromise agreement) is a legally binding confidential agreement between an employer and employee. A severance payment is typically given in return for the employee’s agreement not to pursue any employment tribunal or civil courts claims arising from their employment or its termination. A settlement agreement can also provide an opportunity for employers to secure additional protection in relation to its business needs in the context of the employee’s future business activities, including reaffirming post-termination restrictions and duties of confidentiality, while preventing employees from bad-mouthing their ex-employer.

At iLaw, we have over 20 years’ experience putting together commercially focused and robustly drafted settlement agreements on behalf of employers.

Here are our top 5 strategies for using settlement agreements based on our skills and expertise in this area:

1. Settlement agreements are a useful tool when an employer is faced with insurmountable workplace issues surrounding a particular employee

Settlement agreements are a particularly effective tool for employers where they cannot see a way forward in terms of an employee’s continuing employment but resolving the situation presents challenges. For example, where it may be difficult to justify a particular redundancy. Work performance procedures can take months to follow involving having to give a series of warnings before any decision can be taken to dismiss. Settlement agreements are particularly useful in such circumstances because they offer employers a quick and clean method of terminating someone’s employment without having to undertake a long and difficult redundancy, disciplinary or capability process, which usually involves substantial management time.

2. Make sure to pitch any financial settlement under a settlement agreement a commercially appropriate level.

There is no prescribed sum an employer should offer an employee under the auspices of a settlement agreement. The amount will very much depend on the reasons why the employer wants to terminate the employee’s contract of employment, the terms and conditions in the employee’s contract of employment and the likely value of any potential claims they may have arising out of their employment and its termination.

As an employer you are effectively compensating the employee for terminating their employment and not filing an employment tribunal claim. For employees with over two years’ employment you ought to be aware this gives them sufficient continuity of employment to claim unfair dismissal. Even if they can’t fulfil the service requirement for unfair dismissal depending on the background to the dispute they may have a claim for discrimination which needs to be compromised out of.

At the same time as considering making an ex gratia payment to the employee, employers need to ensure that all contractual entitlements (e.g. notice or payment in lieu, holiday entitlement, commission, bonus etc.) are taken care of as part of the settlement.

It’s wise to ensure professional legal advice is obtained and the appropriate settlement amount is carefully calculated based on this before pitching such an offer.

3. Make sure the Employer’s cost contribution is appropriate

 For a settlement agreement to be legally binding as a matter of law, the employee has to take independent advice as to its terms and effect.

Given that, by signing the settlement agreement, the employee is effectively compromising out of any claims they may have arising out of their employment and the termination thereof, it is conventional that the employer pays a contribution towards the legal costs of the employee seeking that advice.

It is important that the cost contribution is sufficient to allow the employee to take considered legal advice regarding the meaning and effect of the settlement agreement.

As an employer, you don’t want to make the contribution too high though so as to encourage the employee to instruct the lawyer to create arguments to try to negotiate a higher settlement figure on their behalf. If you do, you are running the risk of effectively giving the employee the bullets to fire the gun so to speak. Depending on the employment sector in which your business operates, its geographical location and the employee’s level of seniority within the organization, a cost contribution of between £250-500 plus VAT. In some rare cases, employers might not offer any contribution at all, for example, where there are strong grounds to dismiss the employee if they won’t sign the agreement.

4. Ensure any post termination obligations are properly catered for under the settlement agreement

In the case of senior employees and sales staff there may be a concern, with them exiting the business, that they may cause it damage commercially in terms of joining a competitor or trying to poach clients or key employees away from the organisation. If you have identified there is a risk of the business’s legitimate business interests being harmed in this way and they have post termination provisions written into their contracts of employment then it is recommended to refer to these restrictions in the settlement agreement also and make it clear the employee is expected to adhere to these obligations. The same goes for maintaining confidentiality and intellectual property rights. Where the employee does not have any such restrictions contained in their contract of employment then the settlement agreement provides an opportunity to write these in. The employee may seek further compensation in return for agreeing to any such post termination restrictions though as they may represent a fetter on their ability to obtain alternative employment in the short to medium term.

5. Give an appropriately focused time limit for signature of the settlement agreement

It is important that settlement negotiations remain focused. You may therefore want to suggest a defined period for consideration and return of the agreement including the Adviser’s Certificate. The Acas Code of Practice on settlement agreements suggests (and it is just that, a suggestion) a period of a minimum of 10 calendar days for the employee to consider the agreement. That ought to be more than sufficient in the circumstances. Many employers state that the offer is open for acceptance for a defined period after which it will be withdrawn. This tends to help focus the mind of the employee.

We hope this article has been useful. If your business is considering offering an employee (or a number of employees even) a settlement agreement we would be very happy to talk to you about strategy generally and how to tailor the agreement(s) to your organisation’s business needs. Please call the author of this article, Julian Cox who heads iLaw’s employment team to discuss on 0207 489 2059 or e mail him at julian.cox@ilaw.co.uk.