Redundancy hits hard on all those involved in the process. Do not fail to plan the redundancy exercise, no matter how small. Redundancy requires substantial preparation and a clear understanding of the legal implications.
Redundancy arises when an employer no longer requires a role to be carried out where there is a reduction in the number of people required to fill a particular role when a business is closing or being relocated.
Redundancy centres on the needs of the organisation and consequent changes in the need for a particular role. Redundancy is not about the performance or failings of an employee.
Consult and record
Consultation is largest part of any redundancy exercise and takes considerable time. Collective redundancy (that is, any proposed redundancy of 20 or more employees over a period of 90 days) requires imparting specific written information. Further, before any employee can be given notice of the redundancy, trade union and employee representatives must be consulted within the prescribed period of 90 days. Of course, that is in addition to individual consultation. However, even where there is only one employee to make redundant, by recording the process on paper, you are much more likely to comply with the law and therefore avoid unfair dismissal claims.
When an employer holds a consultation meeting, it does not necessarily mean that redundancies shall be made. If the company can avoid making employees redundant, it must. Suggestions for alternatives to redundancy should be proposed at the redundancy consultation meetings.
Follow the statutory procedures
Statutory procedures regarding redundancy are still with us until 2009. These procedures should be followed to avoid unfair dismissal claims being made by the employee. For more on the statutory procedure, see the linked articles on this page.
Choose carefully
Employees who may be at risk need to be identified. Where employers need to select from their workforce, selection must be by objective criteria, capability to conduct the job and be non-discriminatory.
Redundancy payments
Identify the cost of contractual notice or payment in lieu of notice and redundancy payments. In collective redundancies, formal notice is usually unable to be given until the prescribed periods have elapsed. Statutory redundancy payments are based on length of service, age (yes, this is still allowed) and salary (current maximum £330 per week), which can be as much as £9,900.
Employees may be entitled to further payment if involved in the business, or it has been previously agreed in the employment contract.
Language
Use the right terminology such as ‘proposed’, ‘envisaged’ and ‘intended’ to show that nothing is set in stone. Act consistently with this terminology. All relevant documents are potentially required to be disclosed in any subsequent Employment Tribunal claim. Lists of names identifying those to be made redundant, inappropriately worded e-mails or future organisation charts are traps for the impatient and unwary employer.
Consider alternative employment
If there are vacancies available or likely to be available which can be filled by those at risk of redundancy, then they must be offered to them.
Look after those that are staying
Redundancy exercises are all about making an organisation run more efficiently and effectively and yet it is easy to lose sight of the people who are going to make that a reality. Consider how you will communicate with the employees who are staying, what you will say and how you can make the message for them positive. For employee morale it is far better to announce redundancies in one swoop than to constantly revisit such uncertainty.
Things to remember:
The fact that an employee is dismissed by reason of redundancy does not prevent him or her bringing a tribunal claim for unfair dismissal;
A minimum of two years continuous employment is required for a person to be entitled to statutory redundancy pay (it is one year for unfair dismissal claims);
Maximum amount of a week's pay which can be taken into account in calculating statutory redundancy pay is (at October 2008) £330;
Maximum statutory redundancy pay for an individual is (currently) £9,900, achievable only by an employee aged over 61 with 20 years continuous service. Maximum unfair dismissal compensation is generally £72,900 (in some cases there is no statutory limit);
Age discrimination: Since October 2006 age limits for entitlement to redundancy pay have been removed but the age-related parts of the formula for calculating statutory redundancy pay have not been removed;
The same minimum statutory dismissal procedures must be observed when a dismissal is by reason of redundancy as when dismissal is for any other reason;
An employee being dismissed by reason of redundancy is entitled to notice.
Special consultation rules apply if 20 or more employees are to be dismissed at one establishment within a 90 day period and employment tribunals can award very substantial "protective awards" if these consultation rules are not followed;
It is a criminal offence for an employer to fail to give written details of calculation of a redundancy payment to a redundant employee;
If an employee is made redundant without being told why he was selected, it is likely that an employment tribunal would find the dismissal was unfair dismissal for that reason alone;
It is a breach of the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 to select employees for redundancy by virtue of their status as part time workers, unless justifiable on objective grounds;
Until October 2006 statutory redundancy pay due to an employee would be reduced or extinguished if he or she was entitled to an occupational pension starting within the 90 weeks after the redundancy. This is no longer so;
If a woman's job becomes redundant while she is on maternity leave she will be treated as automatically unfairly dismissed if the employer had a suitable available vacancy but failed to offer it to her. A "small employer exception" to this rule was ended in April 2007.
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Do not provide a complete or authoritative statement of the law;
Do not constitute legal advice by Net Lawman;
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