Workforce planning requires care

  • 23rd January 2025

Oliver Daniels and Rachel Parkin run through the key considerations for schools when restructuring

 

As VAT on fees becomes a reality, as well as the increase in employer National Insurance contributions and other financial threats facing the sector, many independent schools are taking steps to manage costs. In this context, many are reviewing staffing strategies and are considering implementing structural changes via a staff restructure or redundancy process.

Undertaking such an exercise is often emotive, not only for the staff affected, but also the senior leaders managing such processes. It is therefore important that time is taken to carefully consider the issues and prepare.

With this in mind, we have set out some key practical questions to assist schools in navigating this issue.

 

What’s the difference between a redundancy and a restructuring exercise?

Schools will need to consider whether the proposed restructure gives rise to a redundancy situation under the Employment Rights Act.

In summary, the statutory definition of redundancy identifies three sets of circumstances:

  • Business closure (closure of the school).
  • Workplace closure (for example, closure of one school in a group of schools).
  • Diminished requirements of the business for employees to do work of a particular kind.

If there is a closure of a school or workplace, it will often be clear that any resulting dismissals will be by reason of redundancy. However, where an employee is dismissed as a result of changes within a school or a department, the position may not be clear.

Outside of a business or workplace closure, an employee will only be dismissed by reason of redundancy if the reason for dismissal is wholly or mainly attributable to a reduction in the school’s requirements for employees to carry out work of a particular kind.

If the proposals relate to changes in job duties or other terms and conditions to meet the changing needs of the school, or a school is proposing to remove a role but the duties and responsibilities associated with it are still required but will be carried out in a different way, this may not amount to a redundancy situation. Instead, this is likely to be a restructure and any dismissals that may result would be for “some other substantial reason” (SOSR).

What initial steps should schools be taking when considering restructuring or redundancies?

As part of a fair redundancy procedure, it is necessary to consider whether compulsory redundancies can be avoided or mitigated. Schools should therefore consider whether there are any alternative cost-saving options prior to entering into consultation with affected staff.

What alternative options could a school consider?

Suspending or restricting recruitment – This is often the first step schools take and may involve a freeze on all recruitment or non-essential appointments, as well as the non-renewal of fixed-term contracts, although the non-renewal of a fixed-term contract is, in itself, a dismissal and may amount to a redundancy.

Unpaid leave and staff sabbaticals – If schools are dealing with a temporary reduction in work, another option to consider is talking to staff about a period of unpaid leave or a sabbatical. This may be attractive to some employees depending on their personal circumstances.

Ceasing or reducing the use of agency or casual staff – Schools could consider if it is possible to reduce the number of agency and casual staff working at the school.

Changes to current terms and conditions including:

  • Reducing hours.
  • Reducing salary.
  • Changing staff benefits.
  • Freezing salary.

These changes are likely to be contentious and may amount to a change to the terms and conditions of staff. If such changes are being considered, advice should be sought.

Voluntary redundancies – Schools may also choose to ask whether any of the affected staff wish to apply for voluntary redundancy.

We have considered alternatives, but further costs savings are required. What should the school do next?

Whether schools are embarking on a consultation process regarding a restructure or a redundancy, the school’s business case and rationale for the proposal will be key. The school’s business case will set out the reasons for making the changes proposed, the alternatives considered, and an explanation of the proposals and process to be followed.

The business case should be carefully documented and approved by governors. This will form the basis of the explanation of the proposals to staff and will be important in the event that the school’s decisions are challenged.

How do we determine the staff who might be affected?

Schools will need to consider carefully the pool of staff who are potentially affected by the proposals. When determining the pool, schools need to think carefully about what work is diminishing or changing and which employees perform that work. As part of this, consideration needs to be given to the extent to which staff are doing similar work and whether their skills are interchangeable.

Schools will also need to consider how those at risk will be selected from within the pool, as applicable. This will usually involve the application of objective and measurable selection criteria.

Communicating the proposals to staff

If the proposals impact a small number or a specific category of staff, it would usually be appropriate to brief the affected staff initially as a group. If, however, the proposals impact staff across the school, a whole staff briefing may be more appropriate.

Staff should be informed of the reasoning behind the proposals, the alternatives considered, an overview of the proposals for change and next steps.

It is important to be clear that no decision will be made until the school has undertaken a period of consultation with staff and any recognised union. Such an announcement is likely to be difficult and emotive for staff and should be handled sensitively.

What process should be followed?

Where an employer is proposing to implement structural changes that result in either redundancies or changes in terms of employment, it is necessary first to engage in a period of consultation with affected staff. This will mean discussing the proposals with staff, listening to their feedback and considering accordingly. Transparency and good communication will be key. It’s important to embark on the consultation with an open mind and genuinely consider and respond to any feedback.

The specific requirements for consultation will depend on the number of staff affected, whether dismissals are proposed and whether that triggers collective consultation obligations.

Schools should also consider if any existing consultation arrangements will apply. For example, a school may formally recognise a trade union for collective bargaining purposes or have an existing staff forum which require specific forms of consultation.

It will also be necessary to consider any relevant policies and procedures.

What is collective consultation and when does it apply?

The obligation to consult collectively arises where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a 90-day period.

“Redundancy” for these purposes is construed widely and includes any situation where an employee is dismissed for a reason not connected with the individual employee. Collective consultation will therefore arise not only in redundancy situations but also where employers are proposing changes to staff terms and conditions of employment which may result in a dismissal and offer of re-engagement if the changes cannot be agreed.

The Trade Union and Labour Relations (Consolidation) Act 1992 sets out the requirements for collective consultation. In very general terms, employers must consult with the “appropriate representatives” of affected staff, provide certain statutory information to those representatives and comply with specific notification requirements to the Secretary of State.

Failure to comply with the statutory requirements may result in a protective award of up to 90 days’ pay for each affected employee.

Who are the appropriate representatives for the purposes of collective consultation?

If the school has a formally recognised trade union in respect of the affected staff, the school will be obliged to consult with that union.

Where there is no recognised trade union in respect of the affected employees, or there are staff outside of the bargaining unit that are affected, a school can choose to consult either:

  • Representatives directly elected for the purpose by the affected employees.
  • An existing body of employee representatives, provided they were elected with authority to be consulted about such matters.

When should collective consultation begin and how long should it last?

Where 20 or more staff are affected, the consultation must begin at least 30 days before the first dismissal takes effect. Where 100 or more staff are affected, that timescale increases to 45 days.

Despite the minimum timescales above, the key is to ensure that the consultation is meaningful. Consultation should take place “with a view to reaching agreement” and so should continue for as long as is appropriate in order to either reach agreement or exhaust the possibility of agreement.

If collective consultation requirements apply, do schools also need to meet with the individuals affected?

Yes. Whether or not there has been collective consultation with appropriate representatives, the obligation to consult with individual employees always applies and will be essential to establish the fairness of any dismissal.

What process do we need to follow if fewer than 20 staff are affected?

In these circumstances, there is no statutory obligation to consult with employee representatives – subject to the obligations imposed by any collective bargaining agreement or existing arrangement. It will, however, be important that a fair procedure is followed.

A fair procedure typically comprises consultation with those affected on an individual basis. This will include discussing the proposals, the selection pool and criteria, allowing staff to comment on these issues and to put forward any proposals they may have. It will also be necessary to consider whether there are any suitable alternative vacancies for affected employees.

If, following this, the decision is to move forward with a dismissal, although there is no statutory obligation to hold an appeal, it is advisable to offer employees the opportunity to do so.

What are the risks and how can these be mitigated?

If a fair process is not followed, where there is an obligation to collectively consult, schools risk claims for unfair dismissal (including constructive), protective awards, and, potentially, discrimination claims.

As a result, having a clear business case setting out the business need to consider redundancies or restructures and following a fair and meaningful process of consultation with all affected staff is crucial.

To mitigate the risks, we recommend that schools take sufficient time at the outset to prepare, properly consider and document the school’s business case for the proposals. Starting your considerations and processes early will give you sufficient time to explore the alternative options, which in turn will help form the proposals for change.

The process should not be rushed. The goodwill of staff is vital and this can easily be lost if they do not feel that their views are properly considered

Schools should seek legal advice at an early stage when embarking on a redundancy or restructuring process given the specific requirements and risks involved.

 

Oliver Daniels and Rachel Parkin are education partners specialising in employment at HCR Law

Oliver Daniels

 

Rachel Parkin

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