Redundancy – aspects to consider for Employers.

The UK is among many countries facing unprecedented levels of disruption in the world of employment. The pandemic has shaken many businesses to their foundation – leaving Directors and owners struggling with the difficult choice: provide redundancy for a percentage of their workers, or contend with a deeper (potentially catastrophic) economic deficit from which they would hope to recover. 

A decision to make redundancies is not an easy one for a business, it is an acceptance of instability and that a major loss has been suffered, countering previous development. And though there are different types of redundancy, it remains a painful process for all parties involved, especially the employees.

You have a responsibility as an employer to ensure that redundancies are processed correctly, with all necessary due diligence and consideration of related law. Failure to adhere to published guidelines can leave your business in an exposed position of liability.

Here are the aspects that businesses should consider when approaching redundancies:

Alternative Employment:

Employers must attempt to reallocate staff to an alternate role or status of employment within the business before confirming redundancy. It is important to note that any reassigned employee has the privilege to “trial” this new role for up to 4 weeks (longer if agreed upon in writing) without losing their right to redundancy pay.

Fair Selection Criteria:

When arriving at the decision to make staff redundant it is important that you have clear grounds for selecting that particular employee. These may include:

– Skills, qualification & aptitude

– Standard of work or performance

– Record of attendance

– Any disciplinary record that may be relevant

There have been reported instances of employers adopting a ‘last in, first out’ approach to redundancy. This can only be deemed suitable if additional justification is provided as relying on length of service selection criteria can be recognized as age discrimination.

Unfair Selection:

Under no circumstance must a business select a staff member for redundancy on the following reasons:

– Pregnancy or any reason relating to maternity

– Family leave including; paternity, adoption or time off for dependents

– Acting as an employee representative

– Joining or not joining a trade union

– Being a part-time or fixed-term employee

– Age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

– pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

Notice Periods:

Employees must be given notice of any effective redundancy using the following parameters:

  • At least one week’s notice provided for any employee whose service has lasted 1 month to 2 years.
  • A week’s notice for every year employed for any employee whose service has lasted 2-12 years.
  • 12 weeks’ notice for any employee whose service has lasted longer than 12 years.

Please note, in the event of an immediate cease in trading (or similar) you are able to allow staff to leave earlier than the planned leaving date by offering payment in lieu of notice. 

Necessary consultations:

Good practice adherence would state that regardless of circumstance or level of urgency, employees should be consulted about any redundancy situation directly impacting them. Though there are no published guidelines for redundancies involving fewer than 20 employees, documented consultation would greatly reduce the impact of any appeal or claim made against the organization for unfair dismissal. 

Employers making 20 or more employees redundant within a 90 day period (at a single establishment) must adhere to the governments ‘collective consultation’ rules.

Any consultation should include ways of avoiding or reducing redundancies where possible and should be carried out with the object of reaching an agreement between parties present.

What if I don’t follow these steps:

Redundancy is a difficult process to accept for everyone involved. It can certainly lead to a negative vantage point from employees who are affected. Neglecting to follow the necessary steps detailed above would leave a business open to scrutiny, judgment, and levels of misinterpretation that may result in a negative reaction. The worst-case scenario would be an employment tribunal whereby the employer would be tasked with justifying their actions in relation to redundancies made.

Other Resources:

Types of redundancy.

Notice Period.

Though the above is not a comprehensive guide, more information can be found on the government website: https://www.gov.uk/staff-redundant