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Redundancy

Redundancies are an increasingly common feature of modern business life. We provide pragmatic advice to guide you through the process.

The term ‘redundancy’ is frequently used to describe all manner of dismissals. However, it is important to remember that it is a legal term with a specific meaning. If a genuine redundancy situation exists employers will need to tread carefully so that any ensuing dismissals are fair and non-discriminatory.

Broadly speaking, redundancies occur where there is a business closure, workplace closure or a reduction in need for employees to carry out certain types of work. Whatever the reason for a redundancy, careful documentation is needed from an early stage. The rationale for requiring redundancies should be recorded in as much detail as possible including, where applicable, relevant statistics.

Redundancy proposals should be put to affected employees at the earliest opportunity, when proposals are in a formative stage – not once the decision to make redundancies has been made. Employees who could be made redundant should be placed ‘at risk’ of redundancy and a period of genuine consultation entered into. This will usually involve a series of meetings during which employer and employee discuss the redundancy proposals and how they can be avoided. If the decision to make redundancies has already been cast in stone it raises questions as to whether the consultation process is genuine.

Employees should engage fully with the consultation process and suggest any alternatives they can see. Just because a role is at risk it does not follow that that position will be made redundant – and that should be made clear to employees at the outset.

Where significant numbers of employees are potentially affected by the redundancies, collective consultation obligations may be triggered (see our pages on Collective Consultation). If so, appropriate collective consultation procedures must be followed – the failure to do so can be extremely costly!

Selecting which employees to make redundant can be challenging. Again, this process should be meticulously documented and only selection criteria which are measurable and objective should be used. Consider whether any criterion could be discriminatory – for example applying the LIFO principle (last in first out) and retaining only long serving employees could be indirectly discriminatory on the grounds of age.

Once employees have been selected for redundancy an employer should give thought to whether alternative roles within the business are available and suitable for the employee. Particular care should be taken with women on maternity leave who are afforded special protection and will have the right to be offered alternative roles in precedence over their colleagues…

If redundancies cannot be avoided, employees are entitled to receive a statutory redundancy payment which is calculated by reference to an employee’s length of service, age and weekly wages (subject to a statutory cap).

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