Making employees redundant - redundancy procedures

An increasing number of employers are looking at ways of making cost savings. Unfortunately for many employers they will have no option other than to consider making employees redundant. If you are considering making staff redundant speak to our employment law experts for advice on the correct procedures, 0203 816 9302.

Where redundancies are considered it is important for employers to seek advice from specialist employment solicitors to ensure they are following best practice. Although many employers will have perfectly legitimate reasons for making redundancies, it is still important that employers follow a reasonable procedure which involves consultation, a fair basis for selection and consideration of alternatives before arriving at the decision to make employees redundant.

Our redundancy solicitors are on hand to resolve any concerns you have and guide you through this process. We will help minimise the risk of the potential for any claims and deal with all the formalities of making staff redundant for you. 

  • Redundancy Rules For Employers - Guide to Redundancy Procedures

    Employment law solicitor Adam Pennington provides guidance to employers who are considering making staff redundant. Adam discusses the importance of specialist legal advice and following the correct procedures to ensure the process is fair to employees and doesn't leave businesses open to potential unfair dismissal claims.

    [youtube url="https://www.youtube.com/watch?v=dYGMzFnkhAQ"]

Redundancy procedure for employers FAQs

Are redundancies absolutely necessary?

Making redundancies is a big step and can have a significant impact on those employees who are affected. As such, before any rash decisions are made, it is important to consider the alternatives

You consider any of the following as an alternative to redundancy:

  • Reduce overtime
  • Freeze pay increases
  • Freeze recruitment
  • Reduce number of agency/temporary staff

If redundancies are necessary what procedure do I follow? 

There is no one set policy which employers must follow however they should act reasonably throughout.

The best way to prepare and protect yourself is to have a robust redundancy policy so that when you redundancies do arise, you will have a clear route/procedure to follow.

What if I don't have a redundancy policy?

Whilst having a redundancy policy is very useful, there is no legal requirement for you to have one. Every employer has act reasonably throughout the redundancy process which includes following three key elements:

  • Consultation
  • Selection
  • Consideration of alternative employment

How long do I have to consult with employees?

This all depends on the number of redundancies that are taking place. If you have between 20 and 99 redundancies taking place in the one period then you have a minimum obligation to consult with employees are no less than 30 days. For 100 employees or more that period extends to 90 days.

If there are fewer than 20 employees being made redundant then there are no minimum periods which apply. However, each employer should consult with its employees for a reasonable period. A failure to do so could lead to claims against you for unfair dismissal.

How do I decide who to select for redundancy?

This depends on the nature of the redundancy. If there are sufficient volunteers for redundancy then the process can be relatively straight forward.

However, if you need to make compulsory redundancies then this can be a difficult exercise. You may have those employees who you may prefer, and others you dislike however you cannot let this cloud your judgement. You need to ensure you have an objective and justifiable basis for selection,.

One of the most common ways of selecting employees is to identify a pool of employees which you can select from.

When identifying a pool you should make sure that you are including staff who carry out the same, similar or interchangeable roles.

Once you have arrived at a pool for selection, it is best to apply a set of objective criteria and score employees against this. This can include performance, skills, qualifications disciplinary record etc.

ACAS recommends that you using terms such as 'flexibility', 'attitude to work' or 'commitment', as these are hard to quantify and can be subjective.

It is usually advisable to steer clear of criteria which could give rise to allegations of discrimination for example age, length of service or sickness record.

Do I have to look for a suitable alternative position or can I just dismiss?

A key element of a fair redundancy process is to consider a suitable alternative role. Redundancy should be a last resort. If you unreasonably fail to look at suitable alternative positions then you may leave yourself open to Tribunal claims.

What is a suitable alternative vacancy?

There is no hard and fast rule for this, however there are some guiding criteria which affect suitability.

These include whether their current role is similar in terms of:

  • Salary
  • Seniority
  • Location
  • Nature of the duties

If the employee is offered a suitable alternative employment and unreasonably refuses it then you may be within your rights to withhold their redundancy pay (see below).

What will the employee be entitled to?

If you dismiss an employee by reason of redundancy and they have at least two years’ service, then they are entitled to a statutory redundancy payment as a minimum. The amount will depend three keys factors; the employee’s length of service, age and rate of pay (subject to a maximum of £464).

Employees will be entitled to:

  • one and a half week’s pay for each full year of service in which the employee was aged 41 years or more,
  • one week’s pay for each full year in which the employee was between the ages of 40 and 22
  • half a week’s pay for each full year in which the employee was aged up to and including 21.

You can also offer enhanced redundancy as an incentive for staff to take voluntary redundancy.

Regardless of whether it’s statutory or an enhanced redundancy, you also have to ensure you give them sufficient notice and all outstanding wages and holiday pay on termination. These are due in addition to the redundancy payment.

What if I get it wrong?

Making compulsory redundancies can be minefield for employers, however it is important maintain transparency throughout the process. If you do dismiss an employee by reason of redundancy then you should give them the opportunity to lodge an appeal against the decision.

If an appeal is lodged, then you have handle this carefully. It is important to consider each element of the appeal and justify why you reached the outcome you did.

If you fail to carry out a fair redundancy and/or appeal procedure then the employee may bring claim against you in the employment tribunal providing they have two years’ service.

It is therefore important to take legal advice throughout the process. Our specialist team can be on hand to guide you the process dealing with any issues as and when they arise, thus minimising the risk of any claim against you.

Why choose Stephensons?

Our solicitors recognise that depending on your circumstances, you may require different levels of assistance, so we aim to tailor our advice to suit your needs. From the outset we will give you a clear indication as to the level of costs you are likely to incur, whether you require full assistance during all stages of the process or you require a less hands on approach. We can also offer advice on ways in which you can prevent employment tribunal claims from progressing in the event of a dispute through compromise agreements.

Our specialist solicitors pride themselves in tailoring our service to the client’s individual needs and aim to make the process as painless as possible. Furthermore with a clear indication being provided as to the level of costs you will incur from the outset, you will have piece of mind in knowing exactly what you will receive for your money.

If you have any queries about redundancy procedures please contact us.

loading staff

Handling large scale redundancies 

Guide to the redundancy consultation process where more than 20 members of staff are to be made redundant over a 90 day period.

An increasing number of employers are looking at ways of making cost savings. Unfortunately for many employers they will have no option other than to consider making employees redundant. Although many employers will have perfectly legitimate reasons for making redundancies, it is still important that employers follow a reasonable procedure if there are no alternatives to redundancy available. 

The law

Employers who plan to make more than 20 employees redundant over a period of 90 days or less have a legal duty to consult with trade union representatives or elected employee representatives if there is no trade union.

Consultations must begin:

  • At least 30 days before the first dismissal if between 20 and 99 employees are to be made redundant over a period of up to 90 days
  • At least 90 days before the first dismissal if 100 or more employees are to be made redundant over a period of up to 90 days

Employers must consult with the representatives of any employees who may be affected by the proposed redundancies. The consultation should take into account ways in which dismissals could be avoided, how the number of employees facing dismissal could be reduced and justifying the reasons for dismissals. The consultation should be undertaken with a view to reaching an agreement with the representatives regarding these issues.

During the consultation process employers have a legal requirement to disclose information to the appropriate representatives to allow them to fully understand the process. The information which must be disclosed in writing includes: the reasons for the proposed redundancies, the amount and descriptions of the employees who the dismissals are being proposed for, the total number of employees who fit this description, how employees will be chosen for dismissal, any procedures relating to how the dismissals will be handled, the period over which the dismissals will take place and how redundancy payments will be calculated. This information should be handed to or posted to the employee representatives or where there is a trade union, to their head office.

Best practice

It is best practice that trade unions and elected representatives are consulted with as early and as fully as is possible to allow discussions to take place as to whether redundancies are necessary or if alternative options are available. Alternative options may include: redeployment to an appropriate role elsewhere in the business, removal of the option of overtime (subject to contracts of employment), temporarily stopping recruitment into the business or freezing pay.

Considering suitable alternative roles is a key element of a fair redundancy process. Redundancy should be a last resort. If you unreasonably fail to look at suitable alternative positions then you may leave yourself open to tribunal claims. If a suitable alternative position is found for an employee elsewhere in the business and they choose to accept it it is good practice to consult with them on issues such as: the impact on their salary where the position is of a lower pay grade and arrangements in relation to travel and expenses where the position accepted is in a different location.

What if I don’t follow the process correctly?

Employers are required by law to do all that they reasonably can to meet the requirements regarding redundancy consultation and it is important that you are transparent with the relevant parties throughout the procedure. If you fail to consult trade unions, the elected employee representatives or employees facing redundancy they may complain to an employment tribunal where you could also find yourself facing claims of unfair dismissal and so it is advisable when considering making redundancies in your business that you obtain legal advice on the correct procedures.

Stephensons’ HR support and employment law team can be on hand to guide employers who are going through the process. Our experts can help you to deal with any issues as and when they arise and minimise the risk of any claims against you.

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Handling small scale redundancies

Guide to the redundancy process where fewer than 20 members of staff are to be made redundant over a 90 day period.

An increasing number of employers are looking at ways of making cost savings. Unfortunately for many employers they will have no option other than to consider making employees redundant. Although many employers will have perfectly legitimate reasons for making redundancies, it is still important that employers follow a reasonable procedure if there are no alternatives to redundancy available. 

Considering suitable alternative roles is a key element of a fair redundancy process. Redundancy should be a last resort. If you unreasonably fail to look at suitable alternative positions then you may leave yourself open to tribunal claims. If a suitable alternative position is found for an employee elsewhere in the business and they chose to accept it it is good practice to consult with them on issues such as: the impact on their salary where the position is of a lower pay grade and arrangements in relation to travel and expenses where the position accepted is in a different location.

If no alternative roles are available the consultation process should commence.

You will need to brief managers within your business regarding the decision to conduct redundancy proceedings. It may be that they require support and training, particularly if staff in their team are being considered for redundancy and they are expected to liaise with them. Managers should be involved throughout the process and so need to be fully informed and understand the business need for the decision. If you are the only manager at your company you may consider obtaining help and support from specialists in this area. Our solicitors are specialists in employment law and HR support and can advise and support you during the redundancy consultation process if you require it.

When making small scale redundancies you are required by law to consult with all staff affected individually, not just those who will possibly be made redundant. Each individual should be met with regularly through the process and they should be informed fully about their situation and what you intend to do next. Group meetings may be held too but they are not required by law and should not be used as an alternative to individual meetings as this could lead to claims of unfair dismissal. When deciding which members of staff are to be made redundant you must ensure that the reasons for selecting them are fair and in the best interests of the business. Fair reasons for selecting staff to be made redundant include but are not limited to: disciplinary record, absence record and performance. Be careful not to discriminate when selecting staff to be dismissed.

Once you have chosen who will be dismissed from your organisation you must then start to think about notice periods and redundancy pay. If your business does not offer enhanced notice periods or redundancy pay-outs the statutory amounts must be followed.

Statutory notice periods:

  • One week for employees who have been continuously employed for a minimum of one month but less than two years
  • One week (up to a maximum of 12) for each year of employment when the employee has been continuously employed for two or more years

Statutory redundancy pay – for employees who have been employed continuously for two years or more:

  • Half a week’s pay for every full year of employment whilst under the age of 22
  • One week’s pay for every full year of employment whilst aged 22 or more but less than 41
  • One and half week’s pay for every full year of employment whilst aged 41 or older

During redundancy notice periods it is best practice to allow staff time off to attend recruitment agencies and job interviews.

What if I don’t follow the process correctly?

Employers are required by law to do all that they reasonably can to meet the requirements regarding redundancy consultation and it is important that you are transparent with the relevant parties throughout the procedure. If you fail to consult trade unions, the elected employee representatives or employees facing redundancy they may complain to an employment tribunal where you could find yourself facing claims of unfair dismissal and so it is advisable when considering making redundancies in your business that you obtain legal advice on the correct procedures.

Stephensons’ HR support and employment law team can be on hand to guide employers who are going through the redundancy consultation process. Our experts can help you to deal with any issues as and when they arise and minimise the risk of any claims against you.

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