Before making redundancies, there is a specific procedure set out by law that employers must follow.
After deciding on how many employees to make redundant, but before deciding exactly which ones, an employer must inform and consult with all the employees who may affected.
If there are more than 20 people to be made redundant within a period of 90 days (known as a collective redundancy), then the employer must consult with the 'appropriate representatives', rather than the individual employees.
Appropriate representatives are either employee representatives elected by the employees for the purpose of a consultation, or, if the employees are members of an independent trade union that is recognised by the employer, representatives of that trade union.
The consultation must begin in 'good time' but the legislation does lay down certain minimum periods for which the consultation must last.
- 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, the consultation must begin at least 30 days before the first dismissals take effect.
An employer is required to disclose the following information in writing to the representatives:
- the reasons for the redundancy proposals
- the proposed number and the description of the employees to dismiss
- the total number of employees of any such description employed by the employer at the establishment
- 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
- 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.
If there are no alternatives, the employer should select employees for redundancy using objective criteria. These may include who was employed most recently (Last In, First Out or LIFO), skills, performance, attendance and disciplinary record, experience, and aptitude. Consider whether each criterion should have equal weight.
The employer may 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 their 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.
An employer should make a general announcement about the proposed redundancies to all staff, and emphasise that no decisions will be taken without full consultation with the employees in the areas affected.
There should then follow individual letters to employees affected inviting voluntary redundancies
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; and how the redundancies are to be carried out, including the period of time over which it is proposed they will take place.
The employer should also indicate what consideration has been given to the possibility of alternative employment. If none is available, then this should be explained to the employee.
An employer should 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 that 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.
Employers should 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, then the employee has a statutory right to a trial period of 4 weeks in the new position. 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 in order to retrain the employee for the new work, by agreement between the employer and the employee. Such an agreement must be made before the employee starts the new work; it must be in writing; and it 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, then the employee will receive 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, then the employee will receive 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.
Individuals should be advised of the decision to make them redundant in a brief meeting. This should then be confirmed in writing.
Employers should ensure that employees are given their full contractual notice or that 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 the 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.
If employees are required to work during their notice period, then they are entitled to reasonable time off with pay. This should be agreed by the individual under notice with their direct manager.