Redundancy – Your rights

This article will provide you with a broad understanding of redundancy both for employers and employees, so that you can be aware of your rights and obligations.

What is redundancy? Redundancy encompasses three types of situation: business closure, workplace closure, and reduction of workforce.

Duty of employers to conduct a collective consultation- Where 20 or more employees are being made redundant over a period of 90 days or less, an employer has a duty under the Trade Union and Labour Relations (Consolidation) Act 1992 to:

  • Inform and consult appropriate employee representatives. Where 100 or more redundancies are proposed, consultation must begin at least 45 days before the first dismissal takes effect. For less than 100 redundancies, the consultation period is 30 days. Moreover, they employers need to
  • Notify the Secretary of State. Notification must be received by the Secretary of State at least 45 days before the first dismissal, where the employer proposes to dismiss 100 or more employees within a 90-day period. Where less than 100 redundancies are proposed, the notification period is 30 days.

If the employer fails to do so, he or she can be fined by a Tribunal or a protective award may be issued for the employees.

Claiming unfair dismissal in cases of redundancy-

  1. Timing of the claim and payment of employee– Generally, employees can claim unfair dismissal in cases of redundancy only if they have been working at least for two years for the employer, i.e. starting the day before the second anniversary of the start date. In that case, such employee is entitled to a statutory redundancy payment in addition to any contractual redundancy payment or other benefits that the employer may provide

2. Conditions for a dismissal to be considered unfair-

  • The employer did not establish that redundancy was the real reason for the dismissal, and
  • The tribunal found that the employer did not act reasonably, in all the circumstances of the case, in treating redundancy as the reason for dismissing the employee.

The leading case on reasonableness in relation to redundancy is Polkey v A E Dayton Services Ltd [1987] IRLR 503 in which the House of Lords held that an employer will normally not act reasonably (and a dismissal will therefore be unfair) unless it:

  • Warns and consults employees, or their representative(s), about the proposed redundancy;
  • Adopts a fair basis on which to select for redundancy. An employer must identify an appropriate pool from which to select potentially redundant employees and must select against proper criteria, and unless it; and
  • Considers suitable alternative employment. An employer must search for and, if it is available, offer suitable alternative employment within its organisation.

Also, an employer should consider whether it can avoid making compulsory redundancies or reduce the number of compulsory redundancies, for instance by suspending or restricting recruitment, reducing or removing opportunities, not renewing the contracts of contractors or ceasing or reducing the use of agency workers.

If you need help in regards to the above then please contact us at 020 8579 1345 or by email at info@employmentlawyerinlondon.co.uk

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