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Redundancy process guide for employers

If you anticipate that your business may need to make redundancies or reorganise the workforce, the thought can be overwhelming. There is a lot to consider not only from a commercial standpoint, but from a legal perspective as well. Seeking specialist employment law advice from an early stage before you embark on the process can significantly reduce your business’ liability in relation to making redundancies.

To help your business prepare, below is a short guide and links to helpful articles so that you can consider redundancy in more detail.

Make sure your redundancy is genuine

In order to fairly dismiss on the grounds of redundancy, you will need to ensure that you are fully aware of what redundancy means in statute and in case law. This article on ‘Establishing that a redundancy is genuine’ can help and if you require further specifics, our specialist employment lawyers can guide you. The key claims to avoid are:

  1. Unlawful discrimination –you will need to enure that you do not directly or indirectly discriminate and that a protected characteristic, such as an employee’s sex or race is not the true motive for making someone redundant.
  2. Unfair dismissal – if an employee can successfully argue that there was not a genuine case for redundancy or that the redundancy process used to dismiss was not fair and reasonable in the circumstances, they may be able to claim compensation from your business, for unfair dismissal.
  3. Automatic unfair dismissal because of maternity - it is automatically unfair to dismiss an employee or to select her for redundancy if the reason is connected to her pregnancy or taking statutory maternity leave, or to select a woman for redundancy for a reason connected to her giving birth if this brings maternity leave to an end. Claims for pregnancy and maternity discrimination are also likely in situations like this.

Are there alternatives to redundancy?

If an employee believes that you could have explored alternatives which could have reduced the need for redundancy and that failure to do so means that their dismissal on the grounds of redundancy was unfair, they could make an Employment Tribunal claim against your business.

Alternatives to explore, might include reducing pay, temporary layoffs, part time working or job shares. We have a few further suggestions and offer more detail in our article here. Again, if you would like to discuss how one or more of these measures might work in your business and how to best implement them, our employment lawyers can help.

Is voluntary redundancy an option?

If there may be some employees that would be prepared to leave the business voluntarily, it may save your business time and money to offer this, depending on your business’ circumstances.

Fair selection for redundancy

For a redundancy to be fair you must decide what roles or locations will require a reduced headcount and the correct pools of employees for selection. Once the pools have been considered there must be an objective assessment on objective and fair, non-discriminatory selection criteria for each of the ‘at risk’ employees, to determine which employees, if any, are to be made redundant.

More detail on pools for redundancy and fair selection criteria for redundancy can be found here.  

What consultation obligations are there for redundancy?

Your obligations to consult will depend on how many redundancies you are making and in what timeframe:

Collective consultation will be required if you are anticipating making 20 or more employees redundant at the same establishment, within 90 days. This process is technical and so you may wish to seek professional advice from a lawyer, but more details on this process can be found here.

Individual redundancies where fewer than 20 redundancies are anticipated, this does not require the same level of consultation but the process must still be meaningful and fair.

Is suitable alternative employment available?

As part of the obligation to try to avoid redundancy, whilst you do not have to create a new role, you should make sufficient efforts to search for and point ‘at risk’ employees towards any suitable alternative roles.

If suitable alternatives are available, and employees wish to apply, advising them on how to apply and where they are successful offering those roles to employees who are ‘at risk’ of being made redundant and who would be eligible for statutory redundancy pay can reduce the requirement to make redundancies.

If you would like further guidance on how and to whom suitable alternative roles should be offered and considerations where you have an employee on maternity leave, as well as other factors which may need further thought, our experts can assist. Here is an article on suitable alternative employment to provide further background on the topic.

What Notice and Redundancy Payments will I need to pay?

If you dismiss an employee on the grounds of redundancy, the amount of notice they will need to serve and be paid for, or be paid in lieu of notice for, will be dependent on what is contained in your employee’s employment contract.

If the employment contract is silent on notice or offers less than the statutory notice period for the length of the employee’s service, the statutory notice period will apply instead.

In terms of Redundancy Pay, again, there may be an enhanced redundancy payment clause in your employee’s contract of employment, so it is a good idea to look there first. If there is no such clause, an employee may be entitled to a statutory redundancy payment if they have worked for your business continuously for two years or more. If you would like assistance with calculating redundancy pay and further information about when an employee is or is not entitled to a redundancy payment, you can find our article on this topic, here.

How long does the redundancy process take and how can I best manage the working environment?

This can vary depending on a number of factors, such as whether there are collective consultation obligations or not, the culture of your organisation, the number and particular individuals involved in the process amongst other things.

Whilst making a redundancy process long enough to be consultative and meaningful, you will not want to unduly drag the process out, as it can be unsettling for employees working within an environment where redundancies are being made.

Particularly for those who are ‘at risk’ of being made redundant, it can be extremely stressful knowing that they may soon not have an income and also extremely difficult to motivate themselves.

It is similarly difficult for those not ‘at risk’ of redundancy to be sensitive to those employees at risk but to also try and get them to be productive. If quality or quantity of work is suffering due to the redundancy process, further cost saving measures mightbe needed, in addition to the planned redundancies.

If you have any questions after reading our article or would like more specific guidance in your business’ specific case, our employment lawyers would be happy to assist you.

What happens if the redundancy process goes wrong?

If you anticipate that issues are likely to arise or an employee has already made a complaint about the redundancy process, it is advisable to involve an employment lawyer as soon as possible. as soon as possible.

If you are considering embarking on a redundancy process, it is advisable to have a clear plan of who is doing what and when. As part of this, get all the necessary documentation sorted beforehand, including: a business case document, timetable, consultation scripts and letters, etc.

If you would like assistance with any aspect of redundancy, our specialist employment team can help.   

About our expert

Simon Gilmour

Simon Gilmour

Head of Employment
Simon Gilmour is Head of Employment at Harper James. He joined the firm in April 2018 as a partner in the employment team. Having qualified as a solicitor in 1994, he has worked at top 50 law firms in the West Midlands for 25 years, 18 of which were as a partner and Head of Department.

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