Member Article

Guide to making redundancies

Redundancies are a harsh reality that many businesses may be forced to face and it is a difficult process for both employers and employees to go through.

Suki Harrar, employment lawyer with Wright Hassall, advises on how to make the redundancy process as pain free as possible.

With the right approach, the process can be made more transparent and fair, which is likely to lead to a more positive response from both parties. If employers follow the correct process, it is also likely to reduce the risk of successful claims being made.

Where there are 20+ redundancies at one establishment, the rules on redundancy have changed so please take legal advice before proceeding.

Is there a genuine redundancy situation?

To fall within the statutory definition of “redundancy”, an employee’s dismissal must be “wholly or mainly attributable to”:

· A business closure;

· A workplace closure; or

· The employer having a reduced requirement for employees to carry out work of a particular kind or to do so at the place where the employee was employed to work.

Pool of employees

If there is a genuine redundancy situation, the employer must then consider which groups of employees will be affected by the proposed redundancy. For example, a factory which has 100 staff made up of 80 factory workers and 20 administration staff may decide it needs to retain its factory workers for future progress but that it has too many administration staff. In this case the pool of workers will be administration staff. However, if both administration staff and factory workers were affected by the redundancy situation, there would be two pools: administration staff and factory workers. This is a very basic example and quite often real life scenarios are more complex with employees within the groups doing very different work.

Inform all employees

The employer should invite all employees to a group meeting to inform them that a potential redundancy situation has arisen, the reasons for this and that individual consultation will begin shortly. The employer may also want to state which sector(s) will be affected and the proposed number of redundancies. This is a good time for employers to confirm that they will accept volunteers for redundancy.

First consultation meeting

Employers will need to meet with each affected employee to discuss alternatives to redundancy. Both the employer and employee should discuss any alternatives they have and the employer should also notify the employee of any new positions which are due to become available. In the example referred to above, the administration workers may be informed about the role of a factory worker which is due to become available. It does not matter if the employer does not think the employee will want the job or have the qualifications for the job. The employer should also show to the employee the selection criteria it plans to score all affected employees on.

Selection criteria

If no volunteers come forward and/or if no alternatives can be found after the first meeting, which then forces the employer to continue with the redundancy process, the employer should draw up an objective selection criteria in order to score the affected employees. The employer will then have an idea of the lowest scoring employees and may choose to make these employees redundant if, at the second consultation meeting, no alternatives are forthcoming.

Second consultation meeting

At the second consultation meeting, the employer should discuss the employee’s marked selection criteria with them and ask the employee if they have considered any alternatives to redundancy. If the employee does suggest an alternative, the employer should consider this. If the employee suggested an alternative to redundancy in the first meeting, the employer may wish to discuss this again at this meeting.

Final decision

Once both consultation meetings have been concluded and if no alternatives can be found, the employer may have to make the decision that the position has become redundant. The employer should notify the employee in writing of the outcome of the redundancy process and notify them that they have the right to appeal the decision. Redundancy payment

Some employers may provide an enhanced redundancy payment to their staff in which case, the employer should consult the employee’s contract or possibly any collective agreement which may detail such terms. However, if there is no such provision, the employee will be entitled to a statutory redundancy payment if they have been employed for two years or more.

Sometime employers will provide an enhanced payment to those who volunteer for redundancy and will often ask employees to sign a settlement agreement. Please read our guide to Settlement Agreements for further information.

This was posted in Bdaily's Members' News section by Wright Hassall .