Legal and HR Analysis of Redundancies at ABC Ltd

Assignment Brief

ABC Ltd is a leading marketing business based in London, and has a wide range of contracts with a variety of industries. The business is due to celebrate its tenth anniversary and wants to ensure they use this opportunity to announce the opening of its new offices in the Midlands. Currently ABC Ltd has a total of 200 employees and the opening of the Midlands office will take their total headcount up to 300 employees. ABC Ltd is a very close knit business and provides a supportive environment for all of its employees. There is a small proportion of employees who are members of a trade union but these tend to be the older employees and the union has very limited impact on the operations of ABC Ltd. One of the key aims of ABC Ltd is to provide personal and bespoke marketing solutions for its customers. It has achieved this largely due to the commitment of the Senior Director, Joe Tuckman. Joe has been with the business from the beginning and has some concerns about its rapid growth. Lydia Skinner joined five years ago and is also part of the executive team; she maintains responsibility for creative development. Currently Joe and Lydia have different views about the direction of the Company. Joe believes opening in the Midlands is not a wise move; he is concerned with the current mood of the economy and lack of appetite amongst businesses to spend money. The senior team is made up of four directors and Lydia and Joe have both expressed their views about which way the business should go. The other two directors are John Vroom (Operations), and Peter Herzberg (Sales & Customer Relations). The directors have decided to move forward with the opening of its offices in the Midlands. Lydia is due to take the lead on this project and is quick to make progress in searching for office space. Six months later a number of existing clients terminated their contracts with ABC Ltd as they believe they are no longer given the one to one customer care they had become accustomed to. Joe is outraged as he has long protested that too many of the existing staff are diverting their efforts and attention towards the opening of the Midlands office. Joe believes this has contributed to the deterioration of the working relationship with two of their biggest clients and has now cost them dearly. The opening of the Midlands office is thus put on hold, and in order to ensure the business suffers no further financial losses, a discussion on redundancies has commenced. Ted Maslow, the Human Resources Director has been tasked with identifying the best way forward. After a review of the current staffing structure it has been decided that a total of 22 redundancies will need to be made. Ted Maslow is left to manage these changes and to identify appropriate selection criteria. After long discussions it has been decided that the areas of the business that are most critical should be maintained and grown. The recognised areas that are being preserved are operations, sales, customer relations and Joe’s area of finance. A total of 22 redundancies have been identified, the majority of these being administrative roles from across the business and some more senior posts from the creative team. Four of the roles identified as being at risk of redundancy have caused the HR Director (Ted) some concern; and he has raised this issue with the executive team. Ted has urged the executive team to re-think their approach based on some of the comments from four employees who have been told that they are at risk of redundancy: Lydia Skinner The first employee who is at risk of redundancy is Lydia Skinner, the Creative Director. To a large degree the executive team hold Lydia responsible for pushing the attention of key employees away from their existing roles and clients to focus on the opening of the Midlands office. They also believe her failure to carry out a full and effective due diligence on the move to the Midlands led to the senior team being misinformed about the pros and cons of opening in the Midlands. Lydia has never had any disciplinary action taken against her and is insisting on reviewing the criteria used to decide her selection for redundancy. On examination Lydia discovers the criteria being used are: absence, performance, disciplinary warnings, flexibility & attitude and finally length of service. Out of the executive team she scored poorly as all the other directors have longer service and attend meetings abroad and away from home at short notice and therefore are more flexible. Unfortunately Lydia is unable to do this as she has a young five year old son. Sarah Briggs Another employee who is at risk is Sarah Briggs, the Creative Team Senior Manager. The logic here is that because the creative team will have reduced significantly in size, it no longer requires a senior manager. Sarah believes she has been identified as she is currently on maternity leave and therefore is not at work when key decisions are being made about her future. She is thus unable fully to represent herself. Sarah has suggested she could work reduced hours until the business picks up, but this has been dismissed. Bob Myers A third employee who is at risk is Bob Myers, a junior manager in the creative team. Bob is 62 and nearing retirement, but has already expressed an interest in working beyond retirement. The senior team are keen to use the redundancy process to remove employees who they perceive to lack the energy and drive needed to “take the business forward to the next level”. Bob has expressed his concern, as he believes he has been selected in part because he once raised a grievance against one of the senior executive team (Peter Hertzberg). On investigation no action was taken, but Bob was unhappy as he had clearly overheard Peter talking about homosexuals and how there was “no place for them in the business”. Although Bob is not gay, his 28 year old son has come out and this is well known across the business. Dan Mayo The fourth employee is Dan Mayo, who works as part of the administration team. Dan has been working for ABC Ltd for six years and has scored poorly on the selection criteria due to his absence record. Dan has had a number of absences due to his diabetes and his increasing dependency on insulin which has led his doctor to re-evaluate his condition. Having considered these cases in more depth, the executive team instruct Ted to move forward with the redundancies. As a consequence of this decision the following situations have arisen: Lydia Skinner raised in her consultation meeting that she had discovered her level of pay was not the same as the other directors. Lydia insisted she was given an explanation for the difference in pay. Ted was happy to confirm the position of ABC Ltd as Lydia unlike the others had not worked with the larger clients abroad and didn’t have the same qualifications. Furthermore she had not been with ABC Ltd as long as the other directors. Pam Truman, has seven years’ service and works within the creative team as a team leader, although her role was not made redundant she has encountered a number of difficulties as a result of the job losses in her department. Pam feels she has been treated unfairly. Over the last few months she has seen her workload double. She is given conflicting deadlines, has been provided with no additional resources and is now required both to learn and train staff to use a new IT package. Pam has raised her concerns a few times and been told that if she wants to break into senior management she needs to put in the hours. Last week Pam was told to cancel her leave as an important deadline had to be met, but she is reluctant to do so as she has not had any leave for months. Management hears that Pam has now joined the union and hints to her that she needs to ensure she is clear about ‘where her loyalties lie’. Diane Golding is one of the freelance writers within the creative team and although she is not employed she has felt the impact of the changes. Managers at ABC Ltd are increasingly demanding to know whether she will be working on key projects and are also tightening deadlines. They also want to know when she is on leave and hence unable to commit to ABC Ltd. Diane feels increasingly obliged to account for her whereabouts and as a result in her last appraisal has asked to be part of ABC Ltd.’s bonus scheme. This idea has been dismissed as she does not have a contract of employment.

Answer the following questions in no more than 3000 words. Your report should be cogent, articulate and focused, yet draw on as many sources of worthwhile and authoritative evidence that you can find. All such sources should be properly identified and referenced.

1. Identify and explain what legal risks ABC Ltd might be taking in pursuing redundancies in respect of the four named employees who have raised concerns about their dismissals?

2. Advise ABC Ltd on the legal risks that may emerge once redundancies have been confirmed, and whether the impact on other employees (Lydia, Pam & Diane) should present any concerns for ABC Ltd?

3. What advice would you give the senior management team when running an exercise of this kind in the future? Justify your answer.