Making an employee redundant is never pleasant, but it is essential that employers follow the correct procedure for doing so. Merely complying with basic statutory employment law is not enough.
The guidance below is relevant if you plan to make fewer than 20 redundancies at any one time. If you intend to make more, the process is different. Instead, take a look at our guide to collective redundancy.
The process for 20 or fewer employees
A good place to start, before seeking professional legal advice, is the ACAS guide to managing staff redundancies.
Each step in the process should be carried out separately. This will give employees time to:
- consider, discuss, and challenge the details,
- involve a representative,
- consider any alternatives (if available), or
- look for another job.
If you do not follow the correct procedure, you run the risk of facing an unfair dismissal claim and the prospect of an employment tribunal.
Consider ways of avoiding redundancy
While redundancy may not be preventable, taking the time to consider how you might avoid it (and making a note of this process) will leave you better protected against a claim of unfair dismissal.
Ways to avoid making an employee redundant
- Introduce a recruitment freeze
- Ask for volunteers
- Retrain employees and transfer them to vacant posts
- Implement cost savings (reduce work hours, overtime, wages, benefits, leave, etc.)
Warning and consultation
It is important that you give as much notice as possible, and consult employees at the earliest opportunity.
The approach you should take to the warning and consultation process differs from case to case. However, the consultation should take place before any final decisions have been made.
You are not legally obliged to allow employees at risk to bring a representative to the consultation. However it is recommended that you permit this. Doing so will help you avoid an unfair dismissal claim.
Providing employees with information
The consultation must be genuine. It should be thorough and well organised, and provide the employee with an opportunity to discuss, challenge and change the details and outcome of the process.
Affected employees should receive:
- reasons for the planned redundancy
- details of the selection criteria
- details of why the employee has been selected
- alternatives to redundancy, if possible
- details of the redundancy payment.
The consultation doesn’t have to end in agreement, but it is important you take the time to properly consider the employee’s response.
A fair basis for making an employee redundant
There are many reasons for making someone redundant. Whatever your circumstances, it is critical that the reasons behind your decision are fair and objective, and that you can clearly demonstrate them.
Our guide to selecting employees for redundancy will help you do this.
Your reasoning must not be related to what are known as protected characteristics. These exclude selecting an employee due to their:
- gender reassignment
- marriage and civil partnership
- pregnancy and maternity
- religion or belief
- sexual orientation
Furthermore, an employee cannot usually be made redundant because they have made an allegation, raised a health and safety issue or reported an incident of wrongdoing.
Offering alternative employment
As an employer, you are obliged to try to find suitable alternative employment for an employee you plan to make redundant. This step, whether there is an alternative position available or not, should be part of the consultation process.
If an alternative position is available, the new job must be offered before the planned redundancy is due to take place. It must begin no later than four weeks after the end of the previous role. If you do not follow these steps, you must make a statutory redundancy payment.
If the offer of an alternative job is unreasonably refused by the employee, they lose their right to a statutory redundancy payment.
Providing an opportunity to appeal
There is a chance that an employee may want to appeal your decision. As such, you should ensure the opportunity for appeal is a part of your procedure.
There is no legal obligation to take this step, but it will help you avoid an unfair dismissal claim.
Making an employee redundant is not an easy thing to do. We would always recommend that you take professional legal advice. If you would like further information, get in touch with us today. Our experienced team of employment solicitors is ready to give you clear, accurate advice.