Redundancy dos and dont's for salon owners
Published
21st Jan 2011
by rachael
Inevitably, the challenging economic climate has led to an influx of questions relating to redundancy.
Legal expert David Wright looks at the law relating to redundancy...
I am planning to select a stylist for redundancy based on the team's average daily column income, client retention and retail sales. Is this reasonable?
It seems very reasonable; I would just raise two issues. Firstly, the stylist's wage against column income might be a factor - in other words, you should take into account the daily wage bill of each stylist. Secondly, it is important that during the consultation process, you advise staff of your plan and the selection criteria you intend to use. There is no reason to keep the scores a secret - indeed, the employee selected for redundancy is entitled to see the results of your assessments.
If I make a stylist redundant and my circumstances change, do I have to contact her and offer her re-engagement?
Legally, no you don't, and from the tone of the question I assume you wouldn't want to. However, employees have three months to make a claim to Employment Tribunal of unfair dismissal following their redundancy. If you had appointed someone within three months, the onus would be on you at Tribunal to demonstrate the evidence, reasons for the dramatic turnaround, and why you hadn't anticipated this at the time of making her redundant.
I have been told that redundancy pay is tax free; is this true?
Yes, redundancy pay up to £30,000 is tax free. In some cases the redundancy lump sum, together with a lump sum in lieu of notice, and any outstanding holiday pay (which is taxable) can at least sweeten the bitter pill of redundancy.
Two stylists are working their four weeks' notice, having been told they are to be made redundant. They are entitled to a redundancy payment equivalent to four weeks' pay. One of them has now got a job and has asked to be released immediately. As she has another job does that mean I don't have to give her redundancy pay?
I am afraid not. Many salon owners would have simply paid the four weeks' notice and redundancy pay as a lump sum. If the posts are redundant, what are the staff doing in these four weeks? However, you do have the right to ask them to work their notice. In theory, you could allow him/her to leave early and save a little notice pay, but they are still entitled to the redundancy lump sum.
I have spent more than a month consulting with staff about a redundancy situation. I finally selected a full-time and a part-time stylist for redundancy and have written to them to confirm the decision. One of them has appealed, suggesting the selection criteria were unfair. Is she allowed to do this?
Yes, she is. Redundancy is a dismissal and as such employees must be advised of their legal right to appeal against the decision. You should follow the appeals procedure as outlined in your disciplinary procedure. As indicated above, if you haven't already done so, you must make the reasons for her selection absolutely transparent and share this information with her. I would recommend you arrange the appeal, but write to her and ask her to provide you with the basis and details of her appeal in advance.
I have decided to make my receptionist redundant. While I know the pitfalls, she is the only employee who doesn't directly generate income, and savings on my wage bill are essential. However, the reception work still exists, and will have to be covered by anyone who is free; is this still a redundancy?
It is still possible to make someone redundant in these circumstances. The definition covers a situation where there is a reduction of work of a particular type - in this case reception work. As you indicate, some salons would see reception as the most important part of the business. However, if you have made that choice and you follow a legal process, you should not encounter any problems.
