Dealing with redundancy can be complicated and daunting for an employer. It is important to ensure the correct procedure is followed throughout to avoid the risk of a claim for unfair or wrongful dismissal.
How redundancy works
As an employer, if you no longer need someone in a particular job you may be entitled to make a redundancy. This could be because your organisation is closing or becoming smaller or because you have less work available. You should be able to show that the job in question will no longer exist in order for a redundancy to be genuine.
There are a substantial number of rules governing the redundancy process. Ideally, your business will have a formal redundancy procedure set out in a handbook so that your employees know exactly what to expect. Otherwise, you should follow the procedure set out by Acas.
How to handle redundancy as an employer
Look for alternatives
As part of the process, you will need to consider whether there are any options other than redundancy. Examples include:
- Stopping overtime
- Pay freezes
- Not using casual labour
- Retraining staff
- Moving staff to other available and suitable positions, if available
- Asking for volunteers for redundancy
- Reducing the number of hours worked by staff, if contracts allow
If you do have to go ahead with redundancies, you should follow a fair redundancy process. This includes consulting with staff. If you need to make more than 20 people redundant, then you will need to conduct a collective consultation.
Select and notify staff at risk
You need to identify a pool of people who will be at risk of redundancy. This will include those – for example – on different shifts.
These people should then be told that they are at risk of redundancy and the procedure should be explained to them. This will include consultations and notification if they have been selected for redundancy as well as the timescale involved.
Fair selection criteria
Once you have a pool of potential candidates for redundancy, you must apply fair selection criteria to choose who will be made redundant. This is generally based on the following reasons:
- Skills, qualifications and ability
- Disciplinary record
Some criteria are automatically unfair, such as pregnancy, trade union membership, being a part-time employee or because of characteristics such as age, race, sex or disability.
Those chosen for redundancy should be given notice. The minimum is one week for employees who have been employed for one month to two years and a week’s notice for every year employed from two to twelve years. The notice period is twelve weeks for those who have been employed longer than that.
Redundancy notice pay
Employees should be paid during the notice period or, if you do not want them to work a notice period, in lieu of notice. This is based on their average weekly pay for the twelve weeks before the notice period starts.
Employees who are made redundant and who have been working for you for at least two years continuously are entitled to redundancy pay, based on their age and length of service, as follows:
- 1.5 weeks’ pay for each full year of employment after their 41st birthday
- a week’s pay for each full year of employment after their 22nd birthday
- half a week’s pay for each full year of employment up to their 22nd birthday
The amount is capped at 20 years’ service and a maximum weekly pay amount which varies from year to year.
What happens if an employer cannot pay redundancy?
If you cannot pay redundancy pay because your business would become insolvent if it had to make redundancy payments, the Insolvency Service’s Redundancy Payments Service may loan you the money.
How Springhouse’ lawyers can help
At Springhouse Employment Solicitors we deal only with employment law meaning we have genuine expertise and can advise you on all aspects of redundancy.
We can advise whether you are in a position to make redundancies. We will check that a redundancy situation exists and, if it does, ensure that you follow all the proper processes to avoid claims for unfair dismissal or discrimination. We will guide you through the process of selection and consultation and help you make redundancies as quickly and as cost-effectively as possible.
Expertise for employers
Starting employment: contracts and policies
During employment: handling staff problems
Common issues raised by staff
- Bullying and harassment
- Constructive dismissal
- Family rights and flexible working
- Holiday and working time