What is Redundancy?
Redundancy is the dismissal of an employee from their job, due to the employer reducing the work force.
In most cases redundancies are made, when a job role has disappeared or is no longer required, but other circumstances may sometimes apply.
If redundancy procedures and policies are not followed correctly it can result in a tribunal following unfair dismissal.
Common factors that cause redundancies can include; a job role no longer exists, a business is moving or closing down, cost cuts are being made or new technology now makes a job role unnecessary.
If an employment tribunal feels that you used redundancy as a pretext to dispense with someone whose job had not gone, you will lose an unfair dismissal claim. Be prepared to demonstrate to your employees and to a tribunal that there really was a genuine need to make people redundant. This may be through sales figures, accounts etc. Whatever decisions you make relating to redundancy, ensure that you have grounds to back them up with.
Alternatives to Redundancy
Due to redundancies often being made due to costs, possible alternatives to consider may include:
- Reduced hours of work
- Pay freeze or cut
- Voluntary redundancy
- Early retirement
- Recruitment freeze
- Remove overtime
Volunteers for Redundancy
You may have an employee, volunteer to leave from an area not affected by the proposed redundancies. If this happens, you should think carefully as to whether it would be practical to let them go. If it is not, due to the particular employee having a vital skill, explain this – and put it in writing.
You may find that you require more than one consultation due to alternatives being suggested, in order to find the best outcome relating to proposed redundancies. Be flexible in your timetable,
What is Redundancy Consultation?
A redundancy consultation is where an employer proposes to make collective redundancies and is required in advance to inform any potentially affected employees.
A Redundancy Consultation must take place before any dismissal is made or issued to an employee.
When should a Redundancy Consultation begin?
Employers are legally obliged to consult employees when proposing any redundancies within one establishment within a 30 day period when 20 – 99 employees are proposed to be made redundant.
When 100+ employees are proposed to be made redundant within one establishment, employers are legally obliged to consult employees 90 days from the first proposed dismissal.
However there is no law stating a definitive time scale for Redundancy consultation to begin, when less than 20 employees are to be made redundant. In this situation the employer is still required to perform a redundancy consultation within a reasonable timescale.
Remember that at this initial stage you should be discussing proposals. This is important because if you talk about decisions or finalised redundancies now, the message you give is that the consultation will not change anything. The intention behind consultation is that it should give an opportunity for employees to put forward their ideas, which might avoid compulsory redundancies.
Redundancy Selection Criteria
This is possibly the main area within the redundancy process in which “human error” comes into play. The general rule is that the more complicated you make it, the greater the scope for mistakes.
Try to stick to objective factors in deciding who to make redundant. For a sales person, their achievement of agreed sales targets (or not) is likely to be valid.
Redundancy criteria should be objective and justifiable. If you specify that part time workers are to go, you are likely to be discriminating against mothers who have child care responsibilities.
An employee’s attendance record is also objective, though you should be cautious of selecting on this basis, anyone whose attendance is adversely affected by a disability (or maternity absence – which is not a disability of course!). If you do not know who has a condition deemed to be a disability and who does not, seek professional advice.
Redundancy Paper Trail
It is great if you do all the right things in the right order when making redundancies, but do not simply rely on memories to support your business in the event of a redundancy tribunal claim. When you have consultation meetings, take a record and when alternative proposals are put to you, explain in writing why they are or are not acceptable.
Every part of the redundancy process should be documented, if your business needs help or advice on the documentation that should be carried out when making redundancies, please contact Employment Practice and Law
Right of Appeal
A dismissal by reason of redundancy is still a dismissal and you must not forget to give the right of appeal. Except in very small businesses, the appeal should always be heard by someone not previously involved in the redundancy case.
To find out more about this subject, and how to plan and execute a Redundancy Process for your organisation, you can Contact Us for a consultation. We also run Dealing with Redundancy Seminars for employers faced with having to consider redundancies.