Redundancy: Legal Obligations
There is no doubt that redundancies are sometimes unavoidable for businesses. However, if this situation arises it is important for an employer to understand the law and undertake a fair and reasonable redundancy process in order to lessen the risk of losing an employment tribunal claim.
Here are our top tips for employers to remember when considering making redundancies.
1. Is the redundancy genuine?
An employer cannot just choose to label a dismissal as a redundancy – the redundancy situation must be genuine
The fair reasons are: –
- Workplace closure
- Business closure
- Reduced need for work
- Restructure
- Relocation
2. Consider alternatives to redundancy
As part of a consultation process employers should always consider ways to avoid redundancies. Depending upon the reason for redundancy alternatives could include: –
- pay freezes
- job share arrangements
- redeployment
- flexible working
- part time work
- restricting overtime
- reducing or removing self-employed contractors
- sabbaticals
- early voluntary retirement (bearing in mind the risk age discrimination allegations here)
- voluntary redundancy
This is not an exhaustive list and often this is something which is discussed with employees during the consultation process.
If a business decides to offer voluntary redundancy with an enhanced redundancy package it may wish to request that a settlement agreement is signed by the employee for added protection against future litigation as well as reiterating restrictive covenants and for confidentiality purposes.
3. Undertake a consultation exercise
Employers must consult with employees before making a final decision.
- Individual Consultation: For fewer than 20 redundancies, employers must individually meet each affected employee.
- Collective Consultation: If 20 or more employees are at risk of redundancy within a 90-day period, the employer must consult with a trade union or elected representatives. This must begin at least 30 days (for 20–99 staff) or 45 days (for 100+ staff) before the first dismissal.
4. Make sure the selection pool and criteria are fair and reasonable.
An employer should consider whether a selection pool is required. If so, a selection process of some kind will usually be required.
Any selection pool or criterion must be fair, objective and non-discriminatory.
Employers should keep written documentation of the process they follow.
5. Be mindful of protected characteristics.
Any selection pool or selection criteria should be mindful of protected characteristics under the Equality Act 2010.
This can have an impact in many guises.
- Performance and sickness absence criteria risk disproportionally impacting disabled employees and those who are or have been pregnant or on maternity/adoption or shared parental leave.
- ‘Team Player/attitude’ points risk indirectly discriminating against employees. For example, women are more likely to be the primary carer for children or other family members, religious beliefs or obligations may mean employees are unwilling to frequent certain locations or have religious obligations on certain days, disabled employees may find outside of work events more cumbersome to attend – there are many risks here.
- ‘last in, first out’ criterion could adversely affect younger employees and any criterion relying upon the requirement of academic qualifications may have a greater impact on older employees.
- Have any employees raised a grievance or made a protected disclosure? If so, these shouldn’t be a factor in determining their selection for redundancy.
- Further, a woman who is pregnant, on maternity leave or who is within 18 months of giving birth is in the ‘protected period’ and will be entitled to any suitable alternative vacancies, should any exist.
The above does not mean a business cannot have a selection criteria that may include criterion that relate to performance, absence, attitude, disciplinary records etc but it must be able to demonstrate that the scoring is fair and reasonable.
6. Give a right to appeal?
Strictly speaking employers do not need to give employees the right to appeal in a redundancy procedure but it is generally considered good practice for employers to offer this. Further, an employee may have a contractual right to appeal and/or it may be a requirement as set out in the company policies or handbook.
THIS IS GENERIC INFORMATION ON THE BASIC OBLIGATIONS IN A REDUNDANCY SITUATION AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. PLEASE CONTACT US BELOW IF YOU REQUIRE ADVICE ON YOUR SPECIFIC CIRCUMSTANCES.
EMPLOYERS:
Please use our CONTACT FORM if your business requires assistance with making redundancies.
EMPLOYEES:
Please use our CONTACT FORM if you have been made redundant and require advice on an unfair dismissal.
Please also use our contact form if you have a settlement agreement, more information can be found INFORMATION FOR SETTLEMENT AGREEMENTS
