Redundancy

Making redundancies is never easy and the law can sometimes seem like a minefield. You will need top quality legal advice to ensure that you meet all the requirements.

If you are considering making any of your employees redundant, we recommend that you contact one of our solicitors for a free consultation.

We set out below some of the basic information you need to know.

Consultation

One of the most important principles in any redundancy process is consultation.  The law specifies a minimum consultation procedure if you are intending to make more than 20 redundancies in less than 90 days.  

Even if you are making fewer than 20 redundancies, the general principle of consultation will nevertheless apply and you will need to show that you have consulted appropriately with members of staff who are potentially affected by the redundancies.

During the course of the consultation, you should explain why you consider that redundancies are necessary and invite employees to suggest any alternatives, such as shorter hours.  You should give proper consideration to these alternatives.  You may want to invite people to accept voluntary redundancy.

The consultation process should include details of the following:-

• The reason for the redundancy;

• The numbers and descriptions of the employees it is proposed to dismiss as redundant;

• The total number of employees of any such description affected;

• The proposed method of selecting the employees who may be made redundant, including details of selection criteria;

• How the dismissals are to be carried out, including the period over which the dismissals are to take effect;

• Information on how redundancy payments will be determined;

You should also be ready to discuss questions such as the following:-

• Can redundant employees leave before their notice expires?

• What arrangements are there for redundant employees to have time off to seek alternative work? It is a statutory entitlement for employees who have been continuously employed for at least 2 years to be allowed reasonable time off to look for another job or to arrange training.

• Will trial periods in an alternative job be extended beyond the statutory minimum of 4 weeks?

These consultations should be with all of the employees who are affected, not just those who you expect to make redundant. 

You may wish to have a group meeting with all of the staff before having individual meetings. Although this is not absolutely necessary, it would be viewed in a good light if you have done so.

At the meetings with the individual employees, you should discuss the issues outlined above. 

Alternative Employment

You must also consider the possibility of alternative employment, not just within your company but also within any group company.

Any offer of alternative employment must be made before the old contract terminates.  The offer must enable the employee to commence work not more than 4 weeks after the date of the termination of the original employment.  It must be the same as or not substantially different from the previous work and must be suitable for the employee. 

Alternative work would usually be regarded as unsuitable if it means changing pay, travelling time, skill requirements or status. 

If you were to fail to consider offering alternative employment to the staff who are being made redundant, this is one of the factors that a Tribunal would consider when deciding whether the redundancy was fair. 

Selection Criteria

When deciding on your selection criteria, it is important to demonstrate fairness without any suggestion of discrimination.  Subjective decisions, not backed up by objective evidence, could be deemed to be unfair.

Suitable selection criteria could include the following:-

• Skills

• Experience

• Standard of work

• Length of service

• Attendance

• Disciplinary record

• Qualifications

• Performance records

You must not use selection criteria that are potentially discriminatory.  For example, you should not choose somebody on the basis of their sex, age or national origin. 

After the initial consultation meeting, you should wait at least 2 weeks before taking any further action.  The purpose of this is to demonstrate that you are genuinely considering alternatives to the redundancy.

At the end of the 2 weeks, you should have decided which employees are being made redundant, based on the selection criteria.  You should then apply the required dismissal procedure in respect of each of those employees. 

Notice Period

You should not give notice of dismissal until the conclusion of the procedure, although you do not have wait for the outcome of the appeal. 

Each employee is entitled to 1 week’s notice for each year that they have worked there, subject to a maximum of 12 weeks.  If any of the employment contracts provide for a longer notice period, this will take precedence. 

You are entitled to offer a retention bonus for those who work to the end of their notice period. 

Redundancy payments

All employees who are made redundant will be entitled to a redundancy payment provided that they have been in employment for 2 years or more. 

The redundancy payment is calculated as follows:-

• One and a half week’s pay for each complete year of employment when the employee was aged 41 or over;

• One week’s pay for each complete year of employment when they were aged between 22 and 40 inclusive;

• Half a week’s pay for each complete year of employment when they were aged between 18 and 21 inclusive.

The employment contracts may provide for higher redundancy payments.

Please note that a week’s pay for the purpose of calculating a redundancy payment is subject to a statutory maximum of £310. 

Please contact one of our solicitors if you require legal advice on making redundancies.