Trying to ensure that a redundancy process is carried out correctly is difficult enough when business’ are operating as usual, but what process do you need to follow if there is a recession? Read our guide to make sure you follow the right procedure.
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- What process should employers follow when making redundancies?
- Consider if there is a genuine redundancy situation
- Put in place a written business case for the proposed redundancies and a timetable
- Consider the pool of those being selected for redundancy, selection criteria and any alternative vacancies
- First meeting
- At risk of redundancy letter
- Scoring
- Invite to first consultation letter
- First individual consultation meeting
- Follow up work and consultation letter
- Second individual consultation meeting
- Further consultation needed
- Letter of dismissal
- Appeal
- Can modifications to the individual consultation process be made?
What process should employers follow when making redundancies?
There is no statutory process that employers must follow, but employers should ensure that before making redundancies they follow a fair procedure and have made a fair and reasonable decision to make redundancies, in order to reduce the risk of potential claims including for unfair dismissal.
It is advisable that you follow these steps:
Consider if there is a genuine redundancy situation
This technically means that there is either a closure of the business or place of business where the employee worked or a reduced requirement for the kind of work the employee carries out. So, where there is a genuine redundancy situation:
Put in place a written business case for the proposed redundancies and a timetable
The business case document should set out why the business is proposing to make redundancies and how it is proposing to do so. You should also identify the area(s) of the business that will be impacted by the potential redundancies.
A timetable should also be put together setting out proposed timelines for the redundancy process, who is doing what, the necessary documentation for each stage, etc.
If you would like assistance with drafting the business case document and timetable, please contact our employment solicitors.
Consider the pool of those being selected for redundancy, selection criteria and any alternative vacancies
You will need to look at the likely number of redundancies that will be made. If there are 20 or more redundancies proposed within 90 days, additional obligations will arise* (see footnote at the end of this guide). Namely, collective consultation will be required with the consultation having commenced at least 30 days before the first dismissal, and the Secretary of State will need to be notified. If there are 100 or more redundancies proposed within 90 days, the consultation must have commenced at least 45 days before the first dismissal.
Notwithstanding other potential claims, failure to consult collectively can result in claims for protective awards which can be costly. The details set out below assume that collective consultation will not apply. Given the additional obligations and liabilities that arise with such large-scale redundancies, we would recommend that you take speak to an employment solicitor before commencing the redundancy process.
In any event, regardless of the number of proposed redundancies, a fair procedure will need to be followed for each employee being placed at risk of redundancy.
The pool(s) of employees for redundancy will need to be carefully considered and should be made up of employees who perform the same or similar roles. Selection criteria (that are, where possible, objective) will need to be determined and scores against these criteria will be given to the at-risk employees in each pool, to decide who is provisionally selected for redundancy.
Sometimes unique roles may be identified as being at-risk, in which case there is no need for a scoring process, but their selection must still be justifiable with clear and valid business reasons.
All at-risk employees who are provisionally selected should have the opportunity to challenge their selection as part of the individual consultation process.
If there are any suitable alternative vacancies which the at-risk employees could perform you should make a list of those vacancies and make at-risk employees aware of them and the application procedure during the individual consultation process. If there are any at-risk employees who are pregnant, on maternity, adoption or shared parental leave you should take extra care, as different rules apply.
First meeting
Where possible, this is a group meeting either with all employees or just those that are at-risk of being made redundant. The meeting will need to cover:
- The reasons why redundancies may be required.
- How many redundancies may need to be made.
- An outline of the process and rough timelines.
- How you are trying to avoid compulsory redundancies by other cost-cutting measures such as freezing recruitment and pay rises and asking for volunteers for redundancy or early retirement.
This meeting is an early opportunity to explore if employees have any other ideas as to how redundancies can be reduced or avoided. Be prepared to answer any questions employees may have about the process, including regarding pools, proposed selection criteria and scoring and the right to take time off to seek alternative employment. If you are unable to answer all the questions straight away at that first meeting you could say that an FAQ’s document will be produced and distributed and provide details of an individual contact, if employee’s have specific queries.
It is critical that above all at this stage, it is made clear that employees are only being placed at-risk of redundancy. No final decisions have been made about redundancies, including exactly how many will be made and who will be made redundant. A clear note of the meeting should be taken.
At risk of redundancy letter
The employees who are at-risk of redundancy should all receive written confirmation of information received during the first meeting including any selection criteria and scoring guidelines. In the event that you are intending to undertake a large-scale redundancy where collective consultation will apply, we would recommend that you take specialist employment advice before commencing the redundancy process.
Scoring
Carry out a fair scoring process against the selection criteria. Preferably at least two managers rather than just one manager should carry out the scoring exercise, so that there is less of an opportunity for your business to be accused of bias.
Invite to first consultation letter
Assuming collective consultation will not apply, a second letter should then be sent to those employees who have been provisionally selected for redundancy, to invite them with reasonable notice to a first consultation meeting, where they can discuss and potentially challenge their provisional selection for redundancy. The employee should be given the option to bring a Trade Union Representative or colleague with them to the meeting and be reminded of the process so far. Again, you will want to make clear to the employee that at this stage no final decisions have been made with regards to redundancy.
First individual consultation meeting
This meeting will afford the employee the opportunity to comment on their scores and more generally speak about your proposal to make them redundant. It will also allow you to explain a little bit more about why the employee has been selected, the process going forward if redundancy is confirmed and any suitable alternative roles plus how to apply for those.
Follow up work and consultation letter
After the first individual consultation meeting, you will need to consider any questions you need to answer as a result of the meeting and any representations made about scores, pooling, selection criteria or suggestions for avoiding redundancy. Also, if there are redeployment opportunities within the company the details of these need to be provided.
If scoring changes as a result of representations made, the employee should be informed of this. If this makes a difference to the individuals being placed at risk of redundancy, relevant employees will need to be informed and the process started again with the new at-risk employee.
The employee should be provided with a follow-up letter summarising the content of the first individual consultation meeting.
If you would like assistance with drafting this letter, please contact our specialist employment solicitors.
Second individual consultation meeting
If nothing has changed as a result of the first consultation and follow up work the employee should be invited to attend a second individual consultation meeting to be advised that they have been selected for redundancy and what they are entitled to receive as a result. The employee should be given the opportunity to ask any questions and should be advised as to whether they will be expected to serve their notice, the arrangements for the end of their employment, and of the right to take time off to seek alternative employment. The employer should ensure it has a full note of the meeting.
Further consultation needed
In some cases after the second consultation meeting, there are still matters to be finalised that warrant a further consultation meeting, for example where redeployment is still a possibility or there are outstanding challenges to selection which need to determined. A final decision should only be made to confirm dismissal on grounds of redundancy where no further consultation is needed.
Letter of dismissal
Once the final individual consultation meeting has been held and the employee advised that they have been selected for redundancy, you will need to confirm this to the employee in writing. Amongst other things, the letter of dismissal should include the Termination Date, calculation of redundancy payments and other end of employment details. You will need to add to the letter that the employee can appeal the decision to make them redundant and how and to whom this should be submitted as well as the deadline for the appeal.
If you would like assistance with drafting this final letter, please contact our specialist employment solicitors.
Appeal
Employees who have been made redundant should be given the chance to appeal against this decision. Where an employee does appeal this does not however need to delay the dismissal.
If an employee chooses to appeal the decision to make them redundant, a further individual meeting should be held with the employee, who should be given the opportunity to be accompanied. The appeal meeting should preferably be chaired by somebody more senior than the manager who undertook the redundancy process and made the decision to dismiss. If the appeal is successful, the redundancy would be over-turned and the employee would be reinstated and paid for any loss of salary. If, however the appeal is rejected, the redundancy is confirmed and the original termination of employment date stands.
After the meeting you should write to the employee to confirm the outcome of the appeal and make clear that this is the final internal decision on the issue.
If you would like assistance with drafting this appeal letter, please contact our specialist employment solicitors.
Can modifications to the individual consultation process be made?
The redundancy consultation process should still be carried out fairly and thoroughly, following the above steps as closely as possible, with modifications being incorporated only where required. Indeed, more than ever now, where redundancies (or indeed any other dismissals) are made, it is important to get the process right, as the risk of claims is higher than usual when people are struggling with a cost-of-living crisis along with a recession and have serious concerns over future earnings.
Practically speaking, following the end of the Covid-19 pandemic most employers have reverted back to individual consultation meetings being held in person, as many employees are now back working in the workplace, at least part of the time or are able to attend for some meetings, when required. However, we have learned from the Covid-19 pandemic that it is possible to be creative with consultation (individual and collective, where required) and that this does not have to be face to face, this can all still be done electronically using video conferencing. How this can be achieved compliantly, using the facilities available to the business and affected employees, should be considered, along with other practicalities.
If employees are currently working from home full time or are on sickness absence, have a current illness or injury or have a disability which would make travelling to work more difficult or caring responsibilities which require the employee to be at home, it may be possible to instead use technology to work through this issue. For example, with an initial collective consultation where there are a large number of people to communicate to, each team could have a video call with the same scripted announcement being made at the same time. Those who are able to attend in person could do so and those who could not, could dial in and attend the same meeting remotely.
If the employees concerned do not have the facilities to participate in a video call, conducting consultation meetings by telephone or in writing may have to be considered if travelling to the office is not possible.
Ensuring that you have up-to-date contact details and can easily reach current employees before attempting to start the redundancy process, is important.
If you have any specific questions about the redundancy process or how this can be adapted, please contact one of our specialist employment solicitors for support.
Collective consultation
Where it is proposed to make 20 or more redundancies at any one establishment in a 90-day period it is necessary to have collective consultation for at least 30 days (45 days where 100 or more redundancies are proposed). This consultation is in addition to the requirement to consult with individuals and requires employers to consult with appropriate representatives (trade union reps and/or employee reps) about the proposed redundancies.
With such large-scale redundancies, there are statutory notification requirements too. This notification of proposed redundancies should be by way of letter or form HR1 sent to the Secretary of State and copied to the employee representatives, at least 30 days before the first dismissal takes effect (the last date of the affected employee’s employment) if the employer is to dismiss 20-99 employees or within 90 days, or at least 45 days before where the employer is to dismiss at least 100 employees within 90 days.
For information on collective consultation with employee representatives see our article on the collective consultation process, or get in touch with our employment solicitors for advice about making redundancies.
