Redundancy

Redundancy is the fair reason for dismissing an employee but only if a full and fair consultation process is carried out and the reason for the redundancy dismissal is lawful. 

Possible reasons that can give rise to the need for redundancies include Reduced Profits, Takeovers, Mergers, Changing Markets, Operating Losses, Business Reorganisation, Market Pressure, Changing Technology.

It is often sensible for an employer to offer voluntary redundancy to employees as an alternative to compulsory redundancy. However, there is no legal requirement for employers to offer voluntary redundancy, but it is good practice to do so as it may provide a way of avoiding, or at least reducing, the need for compulsory redundancies. 

Alternatives to Redundancy

As an employer, have you considered practical alternatives to redundancy? Potential alternatives may include overtime reductions, work sharing, short-time working, lay-offs, etc. If your business is sufficiently large, you should consider redeployment.  If you fail to consider alternatives and make staff redundant you could expose the business to an unfair dismissal claim by employees.

As part of any fair redundancy process, employers should consider steps that can be taken to avoid compulsory redundancies.

The Redundancy Process

Collective Consultation

If 20 or more employees are affected by the redundancy proposal and there is no trade union or elected spokespersons, the company must give appropriate time for the affected employees to elect representatives through collective consultation during the redundancy process.

How many employees are going to be made redundant?

It is important to note how many employees are going to be made redundant before the redundancy process begins. Adequate time must be allowed for consultation on the redundancy plans and this will be at least:

  • If between 20 and 99 staff are being made redundant over a period of 90 days or fewer, you must begin consultation at least 30 days before the first dismissal takes effect;
  • If 100 or more employees are being made redundant over a period of 90 days or fewer, you must begin consultation at least 45 days before the first dismissal takes effect

If there are fewer than 20 proposed redundancies, the consultation period is not specified but employers should normally allow at least two weeks.

Redundancy Selection

Workplaces vary significantly and so it is difficult to produce a generic redundancy selection criteria matrix that will work for every business.  Some of the key considerations include:

  1. Choose redundancy selection criteria that are as objective and measurable as possible. 
  2. Avoid any selection criteria grounds that will be automatically unfair from an employment law point of view. A
  3. Make sure scoring is carried out by managers (ideally more than one) with direct knowledge of the employee’s work. Always retain written records of the process and evidence for decisions.
  4. Employers should be mindful that using selection criteria like ‘attitude’ and ‘flexibility’ that are hard to quantify and therefore more likely to be subjective.
  5. ‘Performance’ or ‘standard of work’ are reasonable redundancy selection criteria to use but any assessment should be supported by clear, objective data. 
  6. Do not use the fact that an employee has been placed on furlough leave as a reason to select them for redundancy.
  7. Ensure employees in the ‘at risk’ group are provided with their score and sufficient information to discuss and challenge a rating under the redundancy selection matrix.

 

Get in Touch

The redundancy process can be difficult for both the employer and employee. Whether through compulsory or voluntary redundancy, there are legal requirements to follow for both parties. Ensuring all legal steps are followed and the redundancy is lawfully fair is key. If you have any questions and are either party in a voluntary or compulsory redundancy, please call Walker Rose Solicitors on 0203 973 9343, email us at info@WalkerRosesolicitors.co.uk or fill out an enquiry form.

Our mission is to provide businesses, and their owners, with quality legal assistance in the most cost effective way.