What is Redundancy?
A redundancy situation arises where:
- An employer has ceased or is due to cease to carry on business.
- An employer is closing down the workplace where an employee has been employed.
- The needs of the business for work that the employee has been doing has reduced or disappeared or is expected to do so.
- The need of the business for the number of employees to carry out work has reduced or disappeared or is expected to do so.
For an employer to dismiss an employee fairly the employer must show that they had a valid reason for dismissing the employee – i.e. redundancy – and that they acted reasonably in treating that reason as a sufficient reason for dismissing the employee.
Rights of Employees?
Right to be consulted
Reasonable periods of time off with pay to look for other work
The right to be offered suitable alternative posts if any are available within the organisation
What if we get the procedure wrong?
If formal procedures are not followed the employee could claim unfair dismissal if they have been employed for 2 years or more. In principle, redundancy is one of the ‘fair’ reasons for dismissal, but if an employer goes about handling the redundancy without following a fair and reasonable procedure the dismissal will be deemed to be ‘unfair’ and in some cases may be deemed to be automatically unfair.
There may also be the potential of a claim of discrimination being pursued by the employee if they feel that they have been selected by reason of a protected characteristic. The employee would not need any specific length of service. See more about discrimination here https://bhayanilaw.co.uk/employment-advice-for-business/workplace-discrimination/
Employees who have completed 2 years or more continuous employment will be entitled to a statutory redundancy payment. This is calculated with reference to their earnings, age and length of service. The longer an employee has worked for the employer the more redundancy pay they will be entitled to. An enhanced payment can be made by the employer if desired.
Redundancy Selection Criteria
Criteria such as ‘last in first out’ (LIFO), the future needs of the business, capability and performance of the employee in the past, and conduct can all be used when selecting staff for redundancy. However, it is essential to use criteria objectively and reasonably to be able to demonstrate that the selection process was fair.
Bhayani Law Redundancy Guidance Pack
We can provide you with a tool kit to assist you in undertaking redundancies and we can guide you through the process to minimise the risk of a tribunal claim.