Although redundancies are something that employers will want to steer clear of where possible, sometimes they can be unavoidable.
As an employer, in circumstances where redundancies are inevitable, you may not know how to approach things. So, we’ve put together this guide for making redundancies.
Here, Chris Dobbs outlines how to handle the redundancy process, inform staff and remain on the right side of the law.
What is the difference between redundancy and dismissal?
A dismissal is when an employer ends an employee’s employment with them by either bringing the contract to an end with immediate effect (usually by paying in lieu of contractual notice) or providing notice to end it.
A redundancy is a type of dismissal, when an employer ends an employee’s employment with them because they no longer require the role that the employee carried out.
When can a company make someone redundant?
An employer company can make someone redundant when they have a reasonable business reason for not requiring the role that the person carried out anymore.
The redundancy has to be genuine (for example the employer cannot simply replace the person with someone else into the same role) and the employer normally has to go through a fair redundancy procedure.
This often involves a fair selection procedure and should always involve consultation with the affected employee(s).
The exception can be if an employee has less than two years’ service, but even then, it is sometimes necessary, and advice should be sought.
Can you make someone redundant for poor performance?
No, poor performance would come under another of the potentially fair reasons to dismiss, namely capability.
An employer should never mix up the reasons for dismissal, doing so is a good way of losing an employment tribunal case!
What are the alternatives to redundancy?
There are a few common alternatives to redundancy, which are as follows:
- Volunteers
- Job-sharing
- Changing terms and conditions, such as reducing pay and hours
- Redeploying/retraining
- Recruitment and overtime freezes
My colleague Chris outlines the alternatives to redundancy in more detail in his article here.
How do I start the redundancy process?
Best practice in starting a redundancy process is to inform all the potentially affected employees of the reasons why the employer is considering making redundancies.
Employees should not be told at this stage that redundancies will definitely happen, only that there is a risk of them, and that the employer will continue to look at alternatives.
In this situation, it is best to tell all the affected employees at the same time, for example calling them all to a group meeting.
Employees not present, for example off sick or on maternity leave, should not be forgotten, being told as close to the same time as possible by telephone call, video conference or, if the only option, by letter.
How much notice does employer need to give for redundancy?
It will depend how many employees the employer is considering making redundant. For less than 20 proposed redundancies in a 90-day period, an employer just needs to provide reasonable consultation.
For 20 – 99 proposed redundancies a minimum consultation period of 30 days is required, for 100 plus the consultation period is 45 days.
The employees will also have to be given their contractual notice period when the redundancies are confirmed at the end of the consultation. This can be in the form of working the notice, being put on garden leave or being paid in lieu of the notice period.
What is a reasonable redundancy package?
It is not so much what a reasonable redundancy package is, but rather an employer needs to provide at least the statutory minimum.
This is a calculation based on an employee’s age and how long they have been employed. This can range from nothing (if the employee has been employed less than 2 years) right up to 30 weeks’ pay (for an employee with 20+ years’ service and over the age of 61).
There is a statutory cap for each week’s pay, which changes each year. At the time of writing it is £643 per week. In practice, many employers will pay more than the statutory minimum amount.
How do I write a redundancy letter?
Letters should be provided to affected employees throughout the redundancy process, at each stage. For example, a letter should be sent at the beginning of the process, at the selection stage and before/after each consultation meeting.
The most important letter is the one giving redundancy notice at the end of the consultation. This should reiterate the reasons for redundancy, explain how alternatives have been explored and provide the employee with the redundancy package they will receive (for example, notice pay, holiday pay and redundancy pay).
Finally, in most circumstances, the employee should be given the right to appeal the decision to make them redundant.
Advice from an Employment Solicitor
Chris Dobbs says: “While there are some essential elements to a fair redundancy process, in practice each case is different and matters will often crop up that are unexpected.
Because each case is so different, we would suggest that you reach out to an employment lawyer for more tailored and specific advice.
I would be happy to discuss your specific circumstances with you over the phone or in person. We offer a free initial chat for all new clients. You can get in touch using the details below.”
Employment & HR Solicitors
Our bright Employment Team has a vast experience in assisting employers with individual and collective redundancies.
We’d be happy to advise you on the best way forward for your business and answer any questions you might have around the redundancy process.
You can call us on 01202 499255, or fill out the form at the top of this page, for a free initial appointment.
Tailored courses for Employment & HR Professionals
We also offer a range of tailored Employment Training Courses for new and experienced employers and HR professionals, one of which focuses on redundancies.
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