Statutory redundancy procedure explained

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Redundancy procedure

Introduction

This article will be useful reading for any employer or employee. It outlines the statutory redundancy procedure to aid compliance with employment legislation and avoid unnecessary tribunal claims.

Redundancy considerations

Before any decisions are finalised, every employer has a duty to inform and consult their employees about possible redundancies.

	1.	Employers should first decide on the number of employees to be made redundant and then consult those employees. If the employer proposes a collective redundancy (where 20 or more redundancies are made at one establishment within a period of 90 days or less (he has a duty to consult “Appropriate Representatives” first.

		“Appropriate Representatives” are either employee representatives elected by the employees or (if the employees are of a description in respect of which an independent trade union is recognised by the employer) representatives of that trade union.

		If an employer does not recognise a trade union, then he must invite the employees to elect representatives to allow consultation to take place.

		The consultation must begin in “good time” but the legislation does lay down certain minimum periods for which the consultation must last. These are:
		If the proposal is to dismiss 100 or more employees at one establishment within a period of 90 days or less, the consultation must begin at least 90 days before the first dismissals take effect; Otherwise, at least 30 days before the first dismissals take effect where 20-99 employees are to be dismissed.

Information to provide to the representatives
	2.	Employers are required to disclose the following information in writing to the representatives:
		The reasons for the redundancy proposals; The number and description of the employees whom it is proposed to dismiss as redundant; The total number of employees of any such description employed by the employer at the establishment in question; The proposed method of selecting the employees who may be dismissed; The proposed method of carrying out the dismissals, with due regard to any agreed; procedure, including the period over which the dismissals are to take effect; and The proposed method of calculating redundancy payments for individual employees, if this is different to the statutory scheme; The information has to be either delivered to the representatives by hand or posted to an address nominated by the representatives. It is not sufficient for the information to be given verbally.

For more on collective redundancies, see the link at the end of this article.

Selection for Redundancy
	3.	If there are no alternatives, select employees for redundancy using objective criteria. Consider last in first out (“LIFO”), skills and performance, attendance and disciplinary record, experience and aptitude. Consider whether each criterion should have equal weight.

		Also consider the type of work carried out by the employees including whether jobs are interchangeable, whether other groups of employees are doing similar work to those in the group from which selection is proposed to be made and whether an employee’s inclusion in a pool is consistent with his or her previous position.

		The employer must also ensure that those chosen to make the selections for redundancy are capable of assessing the individuals in the pools for selection. The people making the selections should have been given guidance on how to apply the criteria.

Announcement
	4.	Make a general announcement about the proposed redundancies and iterate that no decisions will be taken without full consultation with employees in the areas affected. There should then follow individual letters to employees in the areas affected inviting voluntary redundancies

Individual meetings
	5.	In addition to collective consultation employees should be consulted on an individual basis.

		Employees should be advised fully as to how their position may be affected, the way in which they may be selected for redundancy, how the redundancies are to be carried out including the period of time over which it is proposed the redundancies are to be implemented. The employer should also indicate what consideration has been given to the possibility of alternative employment and if none is available this should be explained to the employee.

	6.	Arrange a second meeting ideally at least two weeks after the first meeting. At this meeting the employee should be given the opportunity to submit any further representations which have occurred to him or her since the initial meeting. Further individual consultative meetings may be necessary depending upon what the employee says and time constraints.

Alternative employment
	7.	Employers should try to offer suitable alternative employment if available. This should be discussed in the individual consultative meetings with the employees as well as in the collective consultative meetings with the Appropriate Representatives.

If an alternative position is offered to and accepted by an employee the employee has a statutory right to a trial period of 4 weeks in the alternative job. The effect of the trial period is to give the employee a chance to decide whether the new job is suitable.

The trial period may be extended to retrain the employee for the new work, by agreement between the employer and the employee. Such agreements must be made before the employee starts the new work; must be in writing; and must specify the date that the trial period ends and terms and conditions of employment that will apply after that date.

If the employee leaves or gives notice within the trial period the employee will get a redundancy payment only if the job was unsuitable and he or she did not act unreasonably in leaving it (subject of course to the employee having 2 years’ continuous service). If an employee is dismissed within the trial period the employee will get a redundancy payment unless the dismissal is for any reason unconnected with the fact that he or she is on trial in the new job.

Confirming redundancies

Individuals should be advised of the decision to make them redundant in a brief meeting. This should then confirm in writing. Employers should ensure employees are given their full contractual notice or they receive an appropriate payment in lieu. Employers may also wish to consider providing assistance in looking for a new job by liaising with employment agencies/job centres.

Individual notices of dismissal may not normally be issued to employees in a collective redundancy situation until the consultation process has been completed in accordance with these statutory requirements (unless the “Special circumstances” defence exists). The required notice period will depend on what an individual’s contract of employment provides for, subject to the minimum periods set out in section 86 of the Employment Rights Act 1996.

Time off for interviews

If employees are required to work during their notice period they are entitled to reasonable time off with pay. This should be agreed by the individual under notice with his or her direct manager.

If by chance you find any error in this information page, do please tell us. We should also welcome your suggestions for new subjects for information pages. These notes:
Do not provide a complete or authoritative statement of the law;
Do not constitute legal advice by Net Lawman;
Do not create a contractual relationship;
Do not form part of any other advice, whether paid or free.