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Making employees redundant can be stressful and fraught with legal risk. As such, it’s sensible to take advice on not only reaching a redundancy decision in relation to affected employees, but also on how to follow a fair process and ensure a genuine consultation process. A genuine redundancy situation could arise, for example, where there is a reduced requirement for a certain type of role. That said, there can be lots of complicating factors in making redundancies. For example, pregnant employees and those on maternity leave will have enhanced rights and it can often be challenging to ensure your fair selection criteria is genuinely an objective selection criteria. That’s where our employment law experts can come in to help you along the way.
Following a correct redundancy procedure is a crucial part of ensuring a fair redundancy process and fair dismissal on the grounds of redundancy. In simple terms, a fair consultation process will involve meaningful consultation meetings, and in some cases applying a redundancy selection criteria. The most important factor in ensuring that the redundancies you are able to carry out are fair is to ensure that no redundancy decision is pre-judged or pre-determined before the meaningful consultation process has been completed.
The consultation you do with employees potentially affected by a redundancy must be meaningful. Therefore, whilst there is no set number of consultation meetings that you must hold with a potentially redundant employee, we generally expert a good and meaningful redundancy process to involve at the very least 2 meetings (and in most cases more). Your first meeting will be the one in which you will introducing the situation involving a proposed redundancy or redundancies. Remember that, for the final redundancy meeting, it is advisable to allow an employee to have the right to be accompanied by a colleague or trade union representative. In between, most employers will also hold individual consultation meetings.
As part of any meaningful redundancy consultation process, employers should look at ways to avoid redundancy where possible. This can involve trying to find suitable alternative employment if possible. Indeed, where an employer fails to meaningfully look for an alternative role for those at risk of redundancy, it can open the employer to the risk of an argument on unfair dismissal.
Where large numbers of employees are at risk of redundancy, the collective consultation process rules may come into play. Following the correct procedures on collective consultation is vital to avoid the risks of having to pay compensation to employees for non-compliance. Collective consultation will usually mean electing employee representatives and consulting with them.
If you are making a statutory redundancy payment, the amount owed will depend on length of service, age and weekly salary (capped). There is a very useful tool for working out statutory redundancy pay on the Government website.
Some employers have policies that state that they will pay an enhanced redundancy payment.
When made redundant, an employee will be entitled to statutory redundancy pay. This will be based on an employee’s age, their number of years service and their weekly salary (which is capped). Employees entitled to enhanced redundancy pay under their employment contracts or individual employer schemes or policies may have a claim for bigger redundancy payments. Otherwise, employees will also be entitled to payment for their notice period (statutory notice is a week’s notice for each completed years’ service up to a maximum of 12).
Sometimes, employers will offer additional payment for those employees willing to volunteer for redundancy. In such circumstances, it is sensible to get those employees to sign a settlement agreement. Often, voluntary redundancy will be an attractive option for some staff (e.g. those looking for early retirement).
Where an employee has been served notice of redundancy by their current employer, that employee will have the right to reasonable time off to attend training, job interviews or to generally seek alternative employment. Sometimes, employees will secure a new job during their notice period. Those employees will usually need to be careful about start dates of new employment so as not to jeopardise any entitlement to a redundancy payment.
This is where an individual who is at risk of redundancy is moved into a role that is current held by someone else; thus making the other person redundant. The bumped employee is then no longer at risk of redundancy and maintains his or her continuous employment under the employee’s contract of employment.
Yes they can. Whilst redundancy is a potentially fair reason for dismissal under the Employment Rights Act 1996, if an employee believes (and can prove) that their redundancy was not a genuine redundancy, they may look to bring an unfair dismissal claim against their employer. Other risks areas for legal claims relate to where an employee claims that no fair process was undertaken or that the selection process for redundancy was flawed or pre-judged. Other claims can relate to non-payment of a redundancy payment or where an employee says that their redundancy was based on discriminatory grounds under the Equality Act 2010. There are strict time limits to bring Employment Tribunal claims. In the case of redundancy dismissals, these will usually be 3 months (less 1 day) from the date of the termination (i.e. the end of the employment contract).
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