Redundancy – advice for employers

A redundancy situation arises when an employee is dismissed due to a reduction in the workforce. This can be as a result of the employer closing down its business, closing down a particular place of work, or simply requiring fewer people to carry out a particular type of work (often due to restructuring or modernisation of working practices).

Handle redundancy procedures effectively

Generally speaking, employees dismissed due to redundancy are entitled to a fair consultation and dismissal procedure (including notice and a right of appeal) and reasonable time off to search for alternative employment.

Additionally, employees’ with over 2 years’ continuous service will be entitled to a statutory redundancy payment (unless they have unreasonably refused suitable alternative employment and subject to some limited technical exclusions). A statutory redundancy payment is calculated using a fixed formula based on an employee’s age, pay and length of service.

Understanding redundancy payments

Some employees may also be entitled to a contractual redundancy payment. Refusal to provide a statutory or contractual redundancy payment to an eligible employee will entitle the employee to pursue legal action against the employer.

Understanding unfair dismissal claims

Although redundancy is a potentially fair reason for dismissal, there are a number of ways in which a redundancy dismissal could be deemed unfair by an employment tribunal.

Examples of factors which could render a redundancy dismissal unfair include:

  • – A failure to consult the employee regarding the redundancy (the consultation must be genuine and not simply a means of communicating a decision which has already been made);
  • – A failure to consider alternatives to redundancy (such as reduced hours or alternative employment);
  • – Using an unfair selection criteria when selecting employees for redundancy (the selection criteria must be fair and objective);
  • – Relying on redundancy as the reason for dismissal when there is no genuine redundancy situation.

The exact requirements and timescale of a redundancy consultation and dismissal will depend on the numbers involved. Broadly speaking, the more employees being dismissed due to redundancy, the longer the consultation period required.

If you are considering a reduction in your workforce and would like advice on the redundancy procedure, call Tallents Solicitors now or email us.