REDUNDANCY

What do you need?

In today’s economic climate there is often a need to change strategic direction, restructure, or generally cut overheads by closing offices and/or reducing the headcount. This is often a difficult decision to make but necessary to protect the long term future of the business. We can guide you through this process in which you must fairly select and consult with employees. Mistakes in a redundancy procedure may give rise to a claim in the Employment Tribunal which in turn can cost you those pounds you are looking to save and likely to run into many thousands to defend.

ISSUES TO CONSIDER PRIOR TO REDUNDANCIES

Various issues should be considered prior to redundancies taking place including deciding if the business needs give rise to a genuine redundancy situation, choosing appropriate redundancy pools and fair selection criteria, consulting with affected employees, calculating redundancy payments and following a fair dismissal procedure.

1. A GENUINE REDUNDANCY?

There will only be a genuine redundancy if the dismissal is for one of the following reasons:

  • the employer’s business or part of the employer’s business has ceased to operate;
  • the employer’s business has moved to a different place;
  • the need for a particular type of work to be carried out has ceased or diminished.
  • The final bullet point can be the most problematic as it is possible for there to be a redundancy situation even if the role of the employee who is being made redundant is still required provided that another employee’s role is no longer required.

2. REDUNDANCY PROCEDURE

Employers must follow a procedure which is fair, objective and non-discriminatory

Employers should:

  • consider alternatives to redundancy such as recruitment freezes, salary cuts/job shares/reduction in hours worked;
  • try to give as much warning as possible of potential redundancies;
  • consult with all employees who may be affected about avoiding/reducing redundancies and the process to be adopted;
  • identify any appropriate redundancy pools;
  • use objective selection criteria;
  • explore whether there is any alternative employment for any affected employee;
  • allow a right of appeal.

 

Where less than 20 employees are being made redundant, consultation need only be directly with the affected employees. However, if a union is recognised, it would still be advisable to involve them in the process.

Where 20 or more employees are being made redundant within a 90 day period a ‘collective redundancy’ situation arises. In such circumstances the employer must notify the Department for Business, Energy and Industrial Strategy and consult with a recognised trade union. If there is no recognised trade union representing all of the employees affected, the employer must consult with elected employee representatives before issuing redundancy notices. Failure to follow the collective redundancy procedure may result in a criminal offence being committed and may also result in awards of up to 90 days’ pay per affected employee.

3. REDUNDANCY PAYMENTS

Once an employee has completed two full years of service they are entitled to a statutory redundancy payment.

The amount of the redundancy payment depends upon the employee’s age and length of service as follows:

  • half a week’s pay for each year worked up to the age of 22;
  • a week’s pay for each year worked between the ages 22 and 41;
  • a week and a half’s pay for each year worked above the age of 41.

 

The statutory limit for a week’s pay is currently capped but changes every year and the length of service is limited to a maximum of 20 years.

The redundancy payment should be paid on the last day the employee works or as soon as possible after that date. Redundancy payments up to £30,000 can be paid free of tax and national insurance contributions.

HOW WE CAN HELP

We can help you manage the redundancy process. We can ensure you understand both your rights and obligations to your employees and help you to protect your business from an expensive Employment Tribunal claim.

We offer a fast, efficient, personal service to meet your individual business needs. For straightforward redundancy programmes, we can discuss the possibility of a fixed fee staged redundancy procedure including template letters, guidance notes specific to your business and telephone advice for follow-up issues and questions.

COULD YOU CLAIM FOR BREACH OF CONTRACT?

Then please contact us on 02380 402066 or use our contact page for a free consultation