Redundancy: An Employers Guide

Cost cutting exercises are never easy and there may be times when you are faced with a situation when redundancies may be the only possibility because fewer employees are needed to perform the Company’s work, the first steps are to:

  • Reduce overtime to a workable minimum.
  • Restrict recruitment.
  • Investigate measures such as short-time working and/or lay offs.
  • Investigate whether there are opportunities for re-deployment to other departments within the Company.
  • Explore other methods by which desired cost cuts could be achieved.
  • Explore whether there are any other options available to avoid redundancy.

Redundancies should be considered a last resort after all the above have been thoroughly explored.

If redundancies cannot be avoided, the Company will consider terminating agency workers and may ask for volunteers for redundancy although this is not a must. Whilst the Company will aim to keep the number of compulsory redundancies to a minimum, the overriding consideration will always be the future needs of the business.

The Central principles in carrying out redundancies are that the Company will:

  • Give employees as much warning as possible that they may be made redundant;
  • Select employees for redundancy according to fair and objective criteria;
  • Carry out consultation with employees who are at risk of redundancy; and
  • Seek to offer alternative employment.  This duty continues right up until the date that the employee’s employment with you terminates.
Time limits

It is critical that you follow the strict timeframes set out in legislation when carrying out consultations:

  • A minimum of 45 days’ consultation where 100 or more jobs are proposed to be made redundant at one establishment.
  • A minimum of 30 days’ consultation where 20 or more jobs are proposed to be made redundant at one establishment.
  • As much consultation as is reasonably practicable where fewer than 20 employees are proposed to be made redundant at one establishment.
The Process

Redundancy is a potentially fair reason for dismissal providing that a genuine redundancy situation exists and that a fair procedure is followed when dismissing the employee.

It is important to remember that the Company is making the job role redundant and not the individual.  The Company needs to ensure that there is a genuine business reason for making the redundancy and to ensure that there are no other employees doing the same job or if they have the same job title as those employees at the risk of redundancy.

The stages in a fair redundancy procedure would typically be as follows:

  1. Identify the positions which will be made redundant;
  2. Identify the appropriate selection pool;
  3. Communicate the potential redundancies to the affected pool;
  4. Identify the appropriate selection criteria;
  5. Make a provisional selection of employees at risk of redundancy;
  6. Hold individual consultation;
  7. Confirm dismissal (if no alternative employment is available) according to a fair procedure; and
  8. Allow for appeals, if requested by employee.
 Time off for job hunting

If the employee has been continuously employed for two years by the date the employee’s notice period ends, they’re allowed a reasonable amount of time off to look for another job and arrange training to help them find another job.

No matter how much time the employee takes off to look for another job or how long the notice period is, the most the Company has to pay the individual is 40% of one week’s pay. You may wish to pay them more of course.

Trial period if suitable alternative employment is found

Employees have the right to a four-week trial period for any alternative employment they’re offered.

The four-week period could be extended if the employee needs training. Any extension must be agreed in writing before the trial period starts.

Redundancy Pay

Redundant employees who have a minimum of two years’ continuous employment with the Company will be entitled to be paid statutory redundancy pay, which is calculated according to the employee’s age, length of service and gross weekly pay subject to a statutory maximum. Please note employee’s may be entitled to enhanced redundancy payments depending on their contract of employment.

Risks

If you are considering a redundancy exercise, we can consult you as part of our Strategic Services. It is always best to talk to one of our HR Consultants to advise you of the risks to your business.

Essentially the Company needs to ensure that has:

  • Properly explored other alternatives to redundancy.
  • Fully consulted with the affected employees.
  • Adopted a fair selection procedure.
  • Offered suitable alternative employment to the redundant employees if any is available.

References:

http://employment-essentials.indicator.co.uk/general/pack/44544/documents/44546/topic/46155/documents_detail/kt_46155_96176_2093/?npos=8&q=redundancy&i=1

https://www.gov.uk/redundant-your-rights/overview