Top 10 Redundancy Tips for Employers

1. Is there a redundancy situation?

There are three main redundancy situations:

• Closure of business as a whole
• Closure of a particular workplace where the employee was employed
• Reduction in the size of the workforce

Remember, it’s only a redundancy situation where you as the employer wants fewer employees doing a particular kind of work. There need not necessarily be less work to be done, but there must be diminished requirements.

2. Is the redundancy genuine?

• Your employees can not challenge whether you acted reasonably in identifying the redundancy situation
• An Employment Tribunal can investigate whether the redundancy is genuine, ie the real reason for dismissal
• Do not be tempted to dress up a performance or capability dismissal as a redundancy. This could result in a finding of unfair dismissal

3. Is there an alternative to redundancy?

• Where possible, information about current challenges to your business should be shared to open up a dialogue with your employees as to whether cutting overheads or restructuring via salary cuts, shorter working weeks, job shares or unpaid sabbaticals could save jobs
• You could also consider whether this is a situation where you can offer voluntary redundancies

4. Are you following your own redundancy procedures?

• If you have a company redundancy procedure, make sure you follow it
• The Acas Code of Practice does not apply to redundancy dismissals, but Acas has issued advisory guidance

5. Have you worked out your pools for selection?

• Ensure the proposed restructure is set out so it is clear from which departments or groups of employees redundancies are being made
• Consider which jobs are at risk and identify the groups of employees where the redundancies will be made (the pool)
• Where there are a number of redundancies, you may need to make redundancies from several pools

6. What are your selection criteria for redundancy?

• They must be fair and objective
• The selection criteria must be capable of measurement and must be non-discriminatory. If appraisals are carried out regularly, use the same criteria in evaluating who should be made redundant unless the needs of the business have radically changed
• Reflect the needs of the business when selecting who is to be made redundant
• Ensure reasonable adjustments are made when scoring a disabled employee. For example, on criteria such as flexibility, output or sickness record, the score will need to be ‘adjusted’ to take into consideration the person’s disability and put them on a level playing field with a non-disabled employee

7. Have you consulted correctly?

• The redundancy consultation process should be meaningful and proper. Once you have identified which of your employees are at risk of redundancy, they should be advised of this and told the length of the consultation period. Twenty-one days is enough time to ensure one-to-one meetings take place
• It is important to include your employees on long-term sick leave or maternity leave in all consultation discussions
• Where more than 20 employees at a single establishment face dismissal within a period of 90 days there are separate requirements for collective redundancies
• Consultation is a two-way process and this is also an opportunity to explore alternatives to redundancy

8. Have you looked at alternative suitable employment?

• Once people have been identified as being at risk of redundancy, you must consider suitable alternative employment, not only in the employer company, but also in any associated company
• Sufficient detail of the new vacancy should be provided and a trial period of at least four weeks allowed. If this is not successful, your employee should be allowed to accept the original redundancy terms
• It is for your employee to decide what is suitable in terms of accepting demotion and/or a salary cut, so consult with your employees and do not assume what jobs an employee would find acceptable
• Any of your employees who unreasonably refuse suitable alternative employment will reduce their chances of winning an unfair dismissal claim and may forgo statutory redundancy pay
• A woman made redundant on maternity leave must be offered any suitable alternative employment, otherwise the dismissal will be automatically unfair

9. Have you been fair about time off to look for work?

• Any of your employees continuously employed for two years have the right to reasonable time off during the notice period to look for a new job or make training arrangements
• It is irrelevant whether your employee has turned down suitable alternative employment
• Your employee is entitled to a maximum of 40 per cent of a week’s pay for time taken off during the whole notice period

10. Have you correctly calculated the redundancy payments?

• Don’t forget to work out the cost of contractual notice or payment in lieu of notice and redundancy payments. Is your redundant employee going to work their notice?
• Statutory redundancy payments are based on length of service, age and salary, subject to a current statutory cap of £489 per week. If your employee earns less than this then you calculate the figure based on gross actual pay
• Check your employees’ contractual, policy and custom and practice rights to redundancy payments as there may be a right to enhanced redundancy payments

For more information on how we can help you with a redundancy, contact us today on 01273 609911, or email info@ms-solicitors.co.uk.