This Summer, Manchester United announced proposals for a redundancy programme that could see up to 250 people dismissed. Now that the Club is proceeding with the proposals, we unpack what’s next and how this will impact employees.
How common are redundancies of this scale?
Redundancy dismissals are common for British businesses. Given the financial pressures businesses have faced recently, many organisations have cut their cloth accordingly. However, redundancies of the scale proposed by the Club are rare in the football industry. When redundancies occur, they are far more common in times of real financial difficulty – as Rangers (2012), Bury (2019), Derby (2021) and Reading (2023/24) have demonstrated.
The Club is profitable, so some have questioned how these proposals can be fair. Redundancies are typically associated with loss-making businesses, but that’s not always the case. Profitable businesses can still make redundancy dismissals fairly and in accordance with UK employment laws.
What do redundancy processes involve?
The specifics of the Club’s process are of course confidential; but redundancy processes of this nature typically involve:
- Volunteers – To reduce the number of compulsory redundancy dismissals, an employer may invite voluntary redundancy applications. If such applications are sought, applicants are often offered enhanced redundancy packages to make the proposition more attractive.
- Collective Consultation – Employers have a duty to engage in collective redundancy consultation where they are proposing 20 or more redundancies at one establishment within a 90-day period. The duty is to consult with “appropriate representatives” of the affected employees(typically union representatives or elected employees). Collective consultation must begin in good time. In the Club’s case, this should be at least 45 days before the first dismissal takes effect. The Club has a legal obligation to notify the Secretary of State via an HR1 Form in collective consultation scenarios.
Collective consultation starts with the provision of specified information to the employee representatives. The purpose of collective consultation is to seek to reach agreement on possible means of avoiding redundancy dismissals, whether numbers could be reduced and whether the effects of the proposals can be mitigated. Employee representatives must have a genuine ability to attempt to influence the content of the final proposals.
- Individual Consultation – Individual consultation with “at risk” staff is crucial to the fairness of any redundancy dismissal, whether collective consultation obligations are triggered or not. The content of collective consultation will invariably influence how individual consultation is carried out, but does not eliminate the need for proper individual consultation. This typically focuses on matters such as redundancy selection criteria, how criteria is applied and whether any suitable alternative roles are available.
The Outcome
If an individual remains provisionally selected for redundancy following consultation, this should be confirmed in writing. Employees may be required to work all or part of their notice but are typically paid in lieu of their notice period.
Employees with more than 2 years’ service receive a statutory redundancy payment if dismissed. Currently, the highest possible statutory redundancy payment is £21,000. Some employers may offer enhanced payments that are significantly more than statutory levels. If enhanced pay is offered, some employers may require the employee to sign a settlement agreement to prevent future Tribunal claims.
If a settlement agreement is not signed, employees with over 2 years’ service would be able to raise Tribunal proceedings for unfair dismissal. Those with under 2 years’ service could also raise a claim if they believe that their dismissal was in any way discriminatory. The Club will no doubt look to follow a thorough and robust redundancy process to avoid any “extra time” on their proposals.
*This article originally featured in The Scotsman on 7 October 2024.
