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Redundancy

Apart from the sheer human upset caused by the need to restructure or reorganise, redundancy situations are fraught with complexity, danger and hidden pitfalls. It is one area where employers must ensure that they are properly advised by experienced, qualified staff.

The Employment law team at Ironmonger Curtis has years of experience advising employers and employees on redundancy rights. This short note sets out some of key considerations.

If you are looking for information on statutory redundancy payments look here.

Do you need an employment solicitor to help you with a redundancy?

  • If you are an employee and you think you need help with your redundancy rights, take a look at our workplace representation page.
  • If you are an employer and who needs to implement a redundancy procedure or reorganisation, take a look at our redundancy and reorganisation service.

Is there a genuine redundancy situation?

In order for a redundancy to be fair, there has to be a genuine redundancy situation. This occurs when there is a “reduction in the requirement for employees of a particular kind.” For example, if you currently employ maintenance staff but have sold off the building they maintain, you have a “reduction in requirement” for maintenance employees, and there is a genuine redundancy situation. On the other hand, if you have a poorly performing salesperson, and want to dismiss this person (but intend to replace him / her with another employee) you do not have a genuine redundancy situation and the dismissal should be handled differently (i.e. a performance-related dismissal).

Collective consultation

There are strict redundancy rights in relation to consultation.

If the employer is proposing to make 20 or more redundancies within a 90 day period, the obligation to collectively consult with their employees will kick in.

The employer is obliged to consult with any recognised trade unions if applicable, or alternatively to invite employees to elect employee representatives for them to consult with. The employer must provide the trade union/s or employee representative with details of the proposed redundancies. There are rules governing the content of information to be given, the way in which the information should be given and when the information should be given.

Furthermore there is an obligation to inform BIS using the HR1 form.

Consultation must be meaningful and the content of consultation must include ways of avoiding the redundancies, which includes discussion about the business reasons for the redundancies, reducing the number of employees to be dismissed and mitigating the consequences of the redundancies.

If you are proposing to make 20 to 99 redundancies, the consultation period must last at least 30 days before any employees are dismissed. If you are proposing to dismiss more than 100 employees, the consultation period must last at least 90 days. The obligation to consult applies to all redundancy situations, not just where 20 or more redundancies are proposed. Although the law does not state a minimum period for consultation in these circumstances, the employer must be able to show that consultation was meaningful and that the employees were afforded the opportunity to comment on / challenge the fairness of certain aspects of the process. Normally an employer making less than 20 redundancies should consult for at around one month although this can be reduced in certain circumstances.

Selection pools

The employer must consider the relevant pools for selection to ensure redundancy rights are properly managed.  A “pool” is a group of employees who are at risk of redundancy. As a very important general rule, pools should be drawn as widely as possible.

If for instance you have sales administration staff who do basically the same job as the general administration staff (i.e. form filling, answering the phones, general admin work etc) you should consider forming one administration pool rather than two. There will of course be certain circumstances where the redundancy of a ‘unique’ role is necessary. However, employers must be sure that the role is unique to avoid unfairly dismissing an employee. If you are unsure, it is worth taking advice on this before continuing with the process.

Selection criteria

Where selection is required, once the employer has identified the pools for selection, they will need to start thinking about the selection criteria as soon as possible. Ideally, you would want to inform employees of the criteria at the same time you inform them that they are at risk of redundancy. This allows them the chance to discuss the criteria with you during consultation but before you actually make the selection. It is absolutely critical that the selection criteria are as fair and objective as possible so as to minimise the ability of a selected employee to challenge his / her selection and / or ultimately claim for unfair dismissal.

Further consultation

Regardless of the number of redundancies proposed, the employer will need to hold meetings with and confirm certain information in writing to employees at various stages of the process to ensure that any subsequent redundancy is fair. Employees who have more than two continuous years’ service who are dismissed by reason of redundancy are entitled to a statutory redundancy payment. This must be paid to the employee – along with any other contractual entitlements – upon termination of their employment.

If you feel your redundancy rights are not being properly adhered to, or if you are an employer facing the daunting task or managing a redundancy situation, do give us a call on the number above.

For business law advice call 0845 225 2635

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