Redundancy

A genuine redundancy occurs in three situations:

• Where a business closes down.
• Where the place of work closes down.
• Where the business requires fewer employees to carry out work of a particular kind.

If there is a conduct or performance issue, employers should follow their disciplinary or capability procedure.

It is important that employers consider all other avenues before resorting to redundancies, such as:

• Early retirement – employees approaching retirement may be willing to consider taking early retirement in order to avoid colleagues being made redundant.
• Voluntary redundancy – offering an enhanced voluntary redundancy package across the workforce might reduce the need to make compulsory redundancies.
• Limit/stop overtime – this can be an effective way to reduce costs in the short-term.
• A change or reduction in working hours – temporarily stopping or reducing employees’ hours and pay can only be done through consultation and express agreement with employees, unless there is a contractual right to do so.
• Recruitment freeze – avoiding replacing employees who leave the business means work can be redistributed amongst existing staff.

At the start of any redundancy exercise, employers must provide certain information to employees including why there is a potential redundancy situation, how many roles are likely to be affected and what options have been considered to avoid compulsory redundancies.

If there are plans to make more than 20 people redundant, the company must engage in collective consultation involving trade unions or employee representatives within minimum periods of time.

In addition to any collective consultation requirements, individual consultation should take place with affected employees to discuss their particular circumstances. Employers should seriously consider suggestions made by employees to avoid redundancies, such as changes to hours and roles, and whether there are any suitable alternative roles within the business.

Holding genuine and meaningful consultation and being transparent about plans and reasons for redundancy from the outset, can help avoid staff jumping to their own conclusions.

To ensure a redundancy dismissal is fair, the employer must follow a fair and reasonable process in selecting people for redundancy.

Employers must identify a selection pool of affected employees carrying out work of a similar kind and then score affected employees against transparent and objective selection criteria, such as performance, skills and attendance. Criteria should not discriminate against staff, for example, on the basis of age, sex, religion, gender, race or disability. Employees should be given the opportunity to comment on their own individual results in any scoring exercise.

Employees who have worked continuously for at least two years are entitled to a statutory redundancy payment. Some employers offer a more generous termination package. Employees are also entitled to notice pay and payment for accrued but untaken holiday.

Redundancy exercises can be challenging and difficult and it is crucial that employers treat employees with dignity, respect and kindness throughout the process.

Employers should support the managers who have to break the news, the people leading the consultation, employee representatives and the colleagues of those who are leaving. Employers may offer support to those facing redundancy in terms of employee assistance programmes and allowing time off for job interviews and training.

It is important that businesses approach a redundancy exercise carefully and sensitively. Careful planning and a clear communications strategy will help alleviate any risks to the business and protect the workforce in the long term.