Redundancy process: Be aware of the pitfalls
Question: I have won my first business in India. Are there any pitfalls I should avoid?
Philip Gilliland from Caldwell & Robinson Solicitors replies:
A: If the business you have won is of a trading nature, say exporting your goods to India, then as with trading in this country, it is not always strictly necessary to consult a lawyer before starting to trade.
Instead you might rely on your standard trading terms and hope that no contractual disputes will arise over payment, intellectual property, quality etc. If you and your trading partner are reputable, then eight times out of ten everything will be fine.
But what about the ‘two times out of ten’ challenges? To state the obvious, you would be sorry that you didn’t de-risk the relationship before you started it.
When considering trading |in any unfamiliar territory two aspects of the law in that territory need to be looked at: what the law says, and how the law operates.
The good news is that in respect of the first of these, Indian law is pretty familiar to us, as it is based on English common law.
So what Indian law says about areas such as intellectual property protection, company law, agency and distribution law etc is not fundamentally dissimilar to our own law.
However, the more challenging aspect of law in India for the Northern Irish SME is how it operates in practice, particularly in the areas of contractual enforcement and ‘dealing with the state’.
Being engaged in civil litigation before Indian courts is generally not a desirable place to be — delays are the stuff of legend, not the stuff of speedy dispute resolution. But, as with challenges associated with corruption, dispute resolution can be substantially de-risked if you invest the time and money at the beginning of your relationship properly, constructing your contractual documents firstly to provide certainty of obligations (which in itself reduces the delay and cost of subsequent dispute resolution) and secondly, depending on the size of the contract, to provide for alternative dispute resolution in quicker and clean jurisdictions, such as Singapore or London (although such a provision will not prevent one party asking an Indian court to claim jurisdiction over the matter).
The lesson, as always in commercial law, is that prevention is better than cure.
Question: I may unfortunately have to reduce my workforce in coming months. How can I make sure I conduct this process fairly?
Gerry Daly, employment law partner in Francis Hanna and Company, replies:
A: We would all agree that in such difficult times employees should be treated with respect. Failure to follow a reasonable process may result in tribunal.
Before dismissing any employee on the grounds of redundancy, an employer must ensure that a genuine redundancy situation exists.
A redundancy situation exists if the employer has ceased or intends to cease carrying on business, ceased business in the location where the employee works: or has a reduced requirement to carry out work of a particular kind at a particular location.
Where there are less than 20 employees to be made redundant within 90 days, then the employer must consult with staff in ‘good time’.
If 20 to 99 employees are to be made redundant the employer must consult with employees at least 30 days before it is to take place. For 100 or more employees consultation must begin at least 90 days before.
If there is a redundancy policy in place, the criteria used in the selection policy in that criteria should be followed. If not, then the employer will have to draw |up appropriate criteria. Examples of criteria could include individual performance, attendance record, service, the needs of the business etc.
A ‘pool’ from which an employee would be selected for redundancy should be established. The pool must be objectively identified and, if possible, should be agreed with employees and their representatives. The employer must write to the employee who has been selected for redundancy, informing him of the reasons upon which the dismissal is being contemplated and invite him to a meeting, advising him of the date, time and location for the said meeting.
The employer must advise the employee of his right to be accompanied to this meeting by a work colleague or union representative.
There must be a meeting with the employee and his selected representative to inform the employee of the reason for selection for redundancy, and consider any representations made by the employee. Write to the employee informing him of the outcome of the meeting, and advising him of his right to appeal. The employee has the right to be accompanied to an appeal.
The employer must genuinely consider alternative employment as a means of avoiding the redundancy. Where suitable alternative employment is available this should be offered to the employee. A refusal to accept an offer of suitable alternative employment can result in losing the right to a redundancy payment.
An employee is only entitled to a redundancy payment under statute if the employer has continuously employed him for at least two years. If so, the calculation is based on the employee’s weekly gross pay, subject to a maximum of £330 per week.
The final step is to confirm the termination of the employment in writing. The letter should set out clearly that the reason for the termination is redundancy and the date upon which the termination takes effect.