By Daniel Hunter

Companies should always take legal advice before deciding to remove people from their posts to minimise the chance of costly and embarrassing employment tribunals.

This is the view of Michael Slade, Managing Director of employment law specialist Bibby Consulting & Support.

Slade was responding to recent cases in which Woolworths issued redundancy notices without consulting the relevant trade union and Edinburgh City Council fell foul of the union after deciding to draw names out of a cereal bowl when they could not decide on any other selection criteria.

Failure to consult can be costly, Slade said, as can be seen in the Woolworths case where over 24,000 former employees have been awarded up to £67.8m in compensation. The Usdaw shopworkers' union successfully claimed that Woolworths had not followed the correct legally proscribed consultation procedure when making its staff redundant after the retailer collapsed in 2009.

"Employers are required by law to consult with unions or employee representatives when making 20 or more staff redundant within a 90 day period," Slade said. "If they are found in breach, the employment tribunal can award a penalty of up to 90 days' pay for each employee affected."

In this case, the tribunal awarded 60 days' pay for every worker employed in Woolworths branches where more than 20 redundancies were made. Some stores made fewer than 20 employees redundant and so 3,000 former workers did not receive any award.

In the second case in Edinburgh, the council wanted to sack three of its team of street cleaners — all temporary workers employed by an agency — but couldn't decide who should go, so the shift manager picked their names randomly out of a cereal bowl. The council said the decision to use a random selection process was agreed with the team but after complaints the three workers were reinstated.

"Removing people from their posts requires strict adherence to employment law," Michael Slade said, "and drawing lots in this way falls considerably short of how employees should expect to be treated. Even though the council claimed to have had a verbal agreement with its staff, this was simply not good enough and left the employer open to a legal challenge.

"We always ask our clients who are considering sacking their employees or making them redundant to seek guidance before they take any action. That way we can steer them through the process to ensure they follow established and sound procedures and avoid the legal pitfalls. These two cases just go to show that even large, well established organisations don’t always get it right — so it’s imperative that SMEs seek expert guidance to avoid costly and embarrassing claims.”