If you find yourself in the position of having to contemplate redundancies, it is important to get the process right. Following the correct procedure is more likely to mean that you will avoid having to defend a claim for unfair dismissal at tribunal and if you do find yourself having to defend a claim you will be more likely to be able to successfully defend it.
When does a legitimate redundancy situation arise?
An employee is dismissed for redundancy if the dismissal is due to:
- the closure of the business;
- the closure of the workplace where the employee was employed; or
- reduced requirements of the business for employees to do work of a particular kind.
An example of a reason that would fail as a fair reason to dismiss for redundancy would be to terminate the employment of a particular employee and then employ someone new to do exactly the same job. This would not fall into any of the situations set out above.
How do you follow a correct procedure?
Identify those “at risk” of redundancy. If, for example, there were 10 people all doing the same job and you had identified that you contemplate making 5 roles redundant, all 10 of those people would be in the “at risk pool.”
If there is only 1 person in a role that is different to everyone else’s and that role is identified as “at risk” of redundancy, then there is no need to have a selection pool. You just need to consult with that one person.
Unless it is a collective redundancy process (more than 20 redundancies are being contemplated) you should consult with each individual employee in the “at risk” pool using objective criteria to decide whose roles will be made redundant.
The employees are entitled to be accompanied by a work colleague or trade union representative in these circumstances (employee representatives should be elected where collective consultation is required – see below) and are entitled to put forward representations to avoid or reduce the need for redundancies.
Identify those that have scored the least using the objective criteria. Consider whether suitable alternative employment is available to avoid the need for redundancies.
If not, then confirm the redundancies in writing and pay redundancy payments, where appropriate, usually for employees that have 2 or more years of service, together with notice pay if notice has not been running throughout the process, and any accrued but untaken holidays at the date of termination of employment.
The whole process can usually be concluded within 2 weeks.
Where there is a proposal to dismiss as redundant 20 or more employees from one establishment within a 90-day period, you must carry out collective consultation.
The process for collective consultation is more onerous and includes notifying The Department for Business, Energy and Industrial Strategy (BEIS) of the proposed redundancies.
Again, it is really important that the procedure is followed correctly, to avoid an Employment Tribunal making protective awards of up to 90 days gross pay for each dismissed employee for breaching the rules relating to providing information, consultation and electing representatives.
In essence if you are contemplating redundancies – take advice from an employment law specialist to make sure that you get it right.