Following the right legal procedures is essential when making employees redundant since a failure to do so could result in an unfair dismissal ruling against the employer at an Employment Tribunal. Although an employee can only claim for unfair dismissal following a full year of continuous service, an employee may claim that they were selected for redundancy due to discrimination with no qualifying period applied, and therefore it is vital for employers to take an approach of following best practice when it comes to redundancy measures.
The Basics Of Redundancy
Any employee who is dismissed from their post due to redundancy who has working continuously for their employer for a minimum of 2 years is legally entitled to receive a statutory payment for redundancy. The amount received is calculated from the employee’s gross weekly pay, their age and the length of their service. The amount is also capped at a maximum of twenty years’ service a £489 per week. Some employers will offer an enhanced redundancy payment entitlement, either discretionally or contractually.
Who Can Be Covered By Redundancy Provisions?
All employees who have a contract with the company are covered, and while employees require a minimum of 2 years of continuous employment with the organisation in order to claim redundancy payments, they only require a single year of continuous employment to claim unfair dismissal. If an employee is then selected by their employer to be made redundant for any reason which is deemed to be unfair, there is no requirement for a qualifying period, and therefore employees are able to bring their claim against the employer regardless of how long they have been in service.
What Constitutes Redundancy?
Employees are considered to be redundant if their dismissal is entirely or primarily attributable to one of the following:
- A relocation of work premises – if a change of premises is far enough away, the employees may be made redundant due to inconvenience and distance.
- Ceasing of operation – if the employer is closing their business or the part of that business in which the employee works.
- Surplus labour – if fewer employees are now required to perform the work which exists or if less work is now available for employees.
Employees are not deemed to be redundant if their dismissal is entirely or primarily attributable to:
- Moving a night worker to a day shift
- Changes to shift systems for more efficient work practices
- Reduced overtime
- Transferred redundancies
What Is The Proper Procedure For Redundancies?
If a situation in which redundancies are likely to be necessary, there are a number of steps which need to be legally followed:
- Advanced warnings – employees must be given adequate notice that there is a likelihood that redundancies will be necessary and that they could be affected. This should be done in writing. All employees on leave for any reason should also be contacted.
- Fair selection – if only a single employee is likely to be impacted by redundancies, there is no need for a selection pool, however in other cases, a pool of potential employees should be identified based on reasons directly relating to the proposed redundancies.
- Selection criteria – once a pool of potential employees has been identified, selection criteria must be drawn up to determine how the employees will be chosen for redundancy from the pool. None of the criteria must be of a discriminatory nature, even indirectly. For example, if your criteria is based on working hour flexibility, this could discriminate against any single parents on staff, most of whom may be women, thus indirectly discriminating by gender. Dismissals are deemed to be unfair automatically if an employee is chosen for any inadmissible reason e.g. pregnancy. Employees must be given sufficient time to peruse the redundancy proposals and make comments, A points scoring system is often used composed of criteria such as skills, performance, disciplinary record, flexibility, illness record and service length.
- Redundancy consultations – employees who have been selected as potential candidates for redundancy must be consulted with meaningfully, and they have an entitlement to know the reasons why they are being made redundant.
- Alternative employment – a genuine effort must be made to find alternative employment for the affected employees within any of the employer’s associated companies.
No employee should be notified of their redundancy until the full process of consultations has been carried out. Before any dismissal is effected, the employee must be sent a statement in writing outlining why they were chosen to be made redundant and they must receive an invitation to a meeting with a representative of their choice. The employee must be informed of the employer’s decision following any such meeting and be notified of their rights to make an appeal.