Throughout the COVID-19 pandemic, education providers have had to juggle a number of competing priorities.
Providing care for children of key workers and vulnerable children and ensuring education settings were safe for the return of all children from September, may have caused staffing issues to take a back seat so far this year. However, now the first half term is complete, and as they start to look ahead, priority for some may shift towards ensuring that they have responsive and robust staffing structures for the post COVID world which, ultimately, leads to consideration of redundancies.
We have set out below some points for your education setting to take into account before deciding to make redundancies.
Whilst it is true that many education providers have struggled with staff shortages in recent months, such as with classroom teachers, there are other areas in which they have not been able to get the right type of staff where they are needed.
With any redundancy exercise, one of the objectives should be to reduce the number of compulsory redundancies where possible. One way to do this is to identify where there are gaps in the structure and allow those at risk to apply for these. They may not come ready-made with all of the necessary skills for the role but, with their existing knowledge of the setting and the systems in place, it may not require too much additional training and support to bring them up to speed.
The legal requirement for there to be collective consultation is triggered when an employer proposes to make 20 or more redundancies at one establishment within a 90-day period. However, many education providers, especially those maintained by local authorities, have enhanced requirements for collective consultation.
Where collective consultation is required, employers will need to consult with the representatives (usually union representatives) of those employees that may be affected by the redundancy in addition to consultation with the individual employees themselves.
We have recently produced a guidance document on redundancy and collective consultation which can be accessed here and can be read in conjunction with any local agreements you have regarding collective consultation.
Making redundancies may appeal as a relatively quick way to shave some expenditure off the budget. However, you need to make sure you have the full picture before pressing on with the redundancy process. Entitlements to enhanced redundancy payments and pension strain payments may not be apparent at first, so it is important to thoroughly investigate the possible costs at an early stage to avoid committing to more cost than you anticipated.
Enhanced redundancy payments
As a minimum, any member of staff with two or more years continuous service that is made redundant will be entitled to a statutory redundancy payment which is based on their age, gross weekly pay (capped at £538) and their length of continuous service (capped at 20 years). The maximum statutory redundancy payment is currently capped at £16,140.
In addition to the statutory payment, some employers offer enhanced redundancy payments to staff. This is particularly common in maintained schools or where enhanced redundancy entitlements have TUPEd over with employees from a maintained school to an academy trust. The enhancement can take different forms such as the removal of the usual cap on a week’s pay or offering more than the minimum number of week’s pay per years’ service.
Where an employee aged 55 or over is made redundant, depending on the rules of the scheme, there may be a requirement to make a payment to “top up” their pension pot. More information about when this would be required and how much this might cost for each employee can be requested from the pension provider.
New cap on exit payments
As of 04 November 2020, the Government has decided to place a cap of £95,000 on exit payments made to employees in the public sector. This will apply to maintained schools as well as academy trusts. The following types of payments will be counted towards the cap:
- A payment made on dismissal by reason of redundancy (but where a statutory redundancy payment is due this cannot be reduced).
- A payment to reduce or eliminate an actuarial reduction to a pension on early retirement or in respect of the cost to a pension scheme of such a reduction not being made (see section on pension strain above).
- An award of compensation under the ACAS arbitration scheme or a settlement or conciliation agreement.
- A severance payment or ex gratia payment.
- A payment in the form of shares or share options.
- A payment on voluntary exit.
- A payment in lieu of notice due under a contract of employment.
- A payment to extinguish liability to pay money under a fixed-term contract.
- Any other payment, whether under a contract of employment or otherwise, in consequence of termination of employment or loss of office.
Whilst the majority of employees that are made redundant from school settings will not be entitled to exit payments in excess of the new cap, it is something to bear in mind for more senior members of staff. For example, as a way of avoiding compulsory redundancies, an employer may offer a financial incentive to encourage volunteers to come forward. Depending on the age and salary of any volunteers, their redundancy pay plus the incentive and any pension strain payments could soon mount up to around the level of the cap.
Further guidance on the new cap is expected to be available soon but if you have any queries about this or any other redundancy issues, please do not hesitate to contact a member of our team to discuss.
Please note, the information included in this update is correct at the date of publishing.