Dealing with Redundancy
What are my obligations with redundancy?
Redundancy occurs when an employee’s current position is no longer deemed necessary to the business. Often, redundancy occurs because the company no longer requires the role of that employee. Economic and technical needs are common causes for redundancy, as companies navigate a constantly developing economic climate. However, redundancy does not occur because the individual is no longer needed; instead, it relates purely to the position itself. Redundancy must be justifiable, and employers must prove that the employee’s current position will cease to exist after they have been made redundant.
Employers are obligated to explore whether their employees can occupy other roles within the company, and must offer alternative positions when possible. Employees are also entitled to time off to train for a new position or search for alternative employment. Additionally, other methods of avoiding redundancy should be utilised. These, among others, include reducing overtime or limiting new recruitment. Employers should also consider incentivising employees to apply for voluntary redundancy or early retirement. Early retirement must be offered to everyone, and must be completely optional.
Employees must be fairly selected for redundancy. When determining who will be made redundant, it is in the employer’s interest to have impartial, logical criteria for why an individual is selected for redundancy. This is particularly important in cases where a specific department faces cutbacks and people with identical positions face redundancy. It is vital that an employer makes the reasoning behind redundancy public. This reasoning should be displayed in the terms and conditions of an employee’s contract, thereby avoiding any claims of unfairness. Examples of redundancy criteria include job performance or attendance, but do not include criteria such as age, gender, disability, race/ethnicity, etc.
It is critical that employers approach redundancy procedures with attention to correct procedure. Bear in mind, if a company recognises a specific Union, they must have a Union Representative involved during the proceedings. Unrecognised Unions are not permitted during redundancy proceedings; in this case, a co-worker may accompany an employee to consultation meetings.
What steps should I take when considering making redundancies?
Once an employer begins to consider redundancies, they are advised to hold a meeting addressing these possible redundancies and the reasoning behind them. Remember that documenting this process from its earliest date is vital. Keep records of all information relayed during meetings, and ask for written correspondence from employees.
In cases where alternative employment is available, employees are entitled to training sessions for the new position. The length of this training period is contingent upon the specific position, but many companies allow at least four weeks to determine whether an employee is suitable for the alternate position. The offer for alternative employment must be issued before the end of the employee’s current position, and must begin no more than four weeks after the end of the current position. It is in the employer’s best interest to facilitate sufficient training and opportunity for this employee, in order to avoid redundancy proceedings. Either the employer or the employee can deem the alternative unsuitable, although the employer must have objective evidence for this opinion before pursuing redundancy. However, if the employer considers the job suitable but the employee does not, they may no longer be eligible for redundancy pay.
If efforts to secure alternative employment fail, employers must adhere to rational and clear criteria when determining who will be made redundant. Document the criteria applied to each employee, and utilise the conditions set forth in the employee contract. It is advisable to select employees through a collaborative panel; by distributing responsibility for the redundancies to an impartial group of people, an employer can avoid claims of biased decision making. Employers must adhere to ‘collective consultation’ requirements if they are making 20+ employees redundant in less than 90 days. Employers must fill out form HR1, in order to notify the Insolvency Service Redundancy Payments Service (RPS). In these circumstances, failing to notify RPS upon the start of consultation is a criminal offence, and can result in £5,000 in penalties.
Notifying an employee of their redundancy can be a difficult part of this process. It is crucial that an employer keep a formal record of this meeting, and of all other correspondence regarding this redundancy. The required notification dates are dependent on how long the employee has worked at the company; an employee who has worked at the company for up to two years is entitled to at least one week, whereas an employee of twelve years or more is entitled to at least twelve. At this meeting, an employer should thoroughly explain the rationale behind their decision, and should present the employee with an opportunity to suggest an alternative. An employee must also be notified of their right to appeal their redundancy. This appeal must be considered by a party separate from those organising the redundancy.
What about redundancy pay?
If you deem an employee redundant, they may be entitled for redundancy pay. In order to be eligible, an employee must have worked under contract for at least two years and cannot have chosen early retirement. Employees may also receive statutory redundancy pay benefits up to £13,500, depending on their age and employment history. Failing to pay redundancy benefits can lead to a claim before the Employment Tribunal. Employees are also entitled to notice pay, or pay in lieu of notice, depending on the details in the employment contract. Employees who are paid in lieu of notice are entitled to everything they would have received during a standard notice period.
We can advise employers during redundancy proceedings, or well before they begin. With our thorough knowledge of employment-related issues, our team of legal advisers can draft an employment contract that will circumvent redundancy issues before they arise. A detailed, reliable contract is vital to navigating these proceedings in order to ensure optimal results for both the employer and the employee. If issues do arise during redundancy proceedings, we will advise the employer on their best course of action, from the early stages of a claim to the Tribunal itself.