Employment Law – The Flexible Firm

In order to have a core of 100 full time employees, Mr. Roger Jones will inevitably have to put forward some redundancies. The Law defines redundancy as a, “dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related.” (ACAS 2008). Redundancy, is therefore, according to the law one of the potentially fair reasons for dismissal. Redundancy means that the employee no longer has a place at the company, however, as opposed to that being for example, due to lack of performance issues or attendance it is strictly because of business reasons which, mean that a job role no longer exists for example due to a downturn in the market or a particular function being outsourced.

The Employment Rights Act (ERA) 1996, states redundancy can take place if the need arises when either: -The employer has ceased, or intends to cease, to carry on the business in the place where the employee was employed, or: The requirements of the business for the employees to carry out work of a particular kind, in the place where they were so employed, has ceased or diminished or are expected to cease or diminish. (Employment Rights Act, 1996) Delico currently faces seasonal downturns where business diminishes. In addition, the place of work” for the design team is to be contracted out, thus business in the in-house design department will also cease. Accordingly, the current situation meets with the above definition of redundancy and Delico is within the law making redundancies.

However, in order to make redundancies a standard procedure known as consultation, must be followed. This involves: 1. Writing to each employee, notifying them of the reason for their redundancy, and inviting them to discuss the matter at hand. 2. A meeting must be held for the employee to discuss the redundancy. The employee has a right to representation at the meeting, (such as a solicitor or Trade Union Representative). 3. An appeal meeting must be held if the employee wishes to appeal.

The employee must be notified of the final decision. Delico must legally draw up a plan to decide who will be made redundant and why. Selection must be based on objective criteria, which may include things like length of service, attendance & discipline records, skill, competencies and qualifications. Current legislation does not mention criteria for selection, only that the selection for redundancy must be objective. Case law refers to

Since more then twenty employees at Delico are to be made redundant, the redundancy operation falls under the TULRCA 1992 Act. This legally means that Delico must consult with representatives of the employees, including any existing union. The representatives must be informed of the business reason for the redundancies. Additionally, by law the Department for Business Enterprise and Regulatory Reform (BERR) must be consulted 30 days before redundancies are made.

It is advised that Delico Ltd. immediately develop a plan to implement these steps. (Compact Law 2008). It is recommended that Delico Ltd. be aware of abiding by the employment contracts of the employees selected for potential redundancy. Employees may already have redundancy terms stated in their contracts. Roger Jones will have to check the individual contracts. If there are no redundancy clauses, then Delico Ltd. can just use the law as the basic redundancy term.

Express & Implied Terms

Delico Ltd. will also have to ensure that any changes in expressed or implied terms are clearly stated. Delico should be sure to draft accurate new employee contracts or any new employees that are hired into the flexi and twilight shifts, and for any contractors (. By law, a contract can be varied only by the agreement of both the employer and the employee. ACAS 2008) The Employment Rights Act of 1996 states that Express terms in the employment contract may be defined by the written statement of terms and conditions of the employment contract. (Employment Rights Act 1996)

Thus, by consideration of the case law as described by ACAS, to vary the employment contract, these steps must be followed by Delico: -Delico must meet with the employee and consult with him or her, or their representative, and explain the proposed changes and the reasons why (such as economic conditions etc.) -The variations of the contract must be agreed upon by both parties, and they should be agreed upon ultimately in writing. (ACAS 2008)


If the above recommendations are followed closely. These proposals pave the way for effective Human Resource Planning (HRP), “The process of matching future organizational requirements with the supply of properly qualified, committed and experienced staff in the right place at the right time. These staff can be drawn from the internal and external labour market” (Marchington & Wilkinson 2000). Delico’s plans will help it become more flexible and competitive, which is essential in order to adapt to the modern business world.

However, it is strongly recommended that Delico’s Management pay attention to the morale and performance of its employees. Large changes at companies such as Delico can potentially cause controversy and unrest among the workforce. All of the employees must be reassured that the company values them. Low morale can heavily damage performance, so Delico should try to re-establish a sense of company camaraderie, and a corporate environment of co-operation and mutual trust. Establishing this may take time, as large groups of redundancies can make the employees who are retained suffer from survivor syndrome, which can contribute to stress. They may become insecure, wondering if “they will be next”.