Redundancy and Restructure
Redundancy is one of the fair reasons for dismissal (subject of course to following a fair procedure.) An employee is potentially redundant if:
- The employer stops or intends to stop carrying out the business for which that employee is employed by them; or
- The employer stops or intends to stop carrying out that business at or near the location where the employee is employed; or
- In either ‘1’ or ‘2’ above the requirement for the work diminishes rather than ceases altogether.
A restructuring of a business can bring about a potentially fair redundancy situation (providing a fair process is followed) if the net result of the restructuring is that less staff (or different staff) are required at a particular location, or work is reorganised in such a way as to require less staff in order to do it. The key though is ‘less staff’. Where a reorganisation or restructuring doesn’t result in a reduction of the number of employees, then staff dismissed as a result may not fall into the category of a redundancy dismissal.
Collective redundancies occur where 20 or more staff are to be dismissed from the same entity. We can assist employers with collective redundancies by separate arrangement.
Unlike collective redundancies there is no statutorily defined consultation period for non-collective redundancies, however it is essential that the employer is able to show that it consulted fairly with the employees dismissed. Consultation should cover:
- The reasons for the proposed redundancies
- Why the individual has become at risk of redundancy (selection methods etc)
- Alternatives to redundancy considered and suggested by the employee e.g., alternative vacancies, part-time working, pay cuts or swapping with another employee (known as ‘bumping’).
- The output of any selection exercise
- Support for the employee that may be available
Only after consultation has been completed should employees be served with redundancy dismissal letters (e.g., after the second 1:1 meeting), if no alternatives were found.
Consultation can take place directly with employees affected, or through employee representatives.
To qualify for a statutory redundancy payment, an employee must have at least 2 years continuous service. The payments then are dependent upon age and length of service.
Should a redundancy situation arise which places a woman on maternity leave ‘at risk’ of redundancy, she will be afforded special protection from redundancy. If there is another employee who also is ‘at risk’ who, in a selection exercise, is objectively scored equivalently to the pregnant employee, but who is not themselves pregnant or on maternity leave, then that employee will be selected for redundancy instead of the woman on maternity leave.
Typical employment law pitfalls
There are substantial risks associated with failing to consult meaningfully. Failure to consult could start with 90-day ‘protective award’ and end up in unfair dismissal claims. Other obvious (and avoidable) risks are that employers sometimes use ‘redundancy’ as a convenient reason for dismissing an employee without otherwise having a solid reason for doing so. Other risks come about through inadequate consultation, starting consultation too late, poor or subjective selection criteria, failing to account for the special protection availed to women on maternity leave and not observing contractual notice requirements.
Help & support
We can help customers develop a fair process for redundancies and be on hand to assist during that process. Customers contemplating redundancy programmes should please contact us straight away. Larger scale/collective exercises may be undertaken by separate arrangement (beyond the scope of a myhrdept.co.uk annual subscription) and we will notify customers where this appears to be the case and will provide an estimate before engaging in work.
If you’re thinking of outsourcing your HR, payroll or employment law needs, why not contact myHRdept? Call us on 01628 820515, email us at firstname.lastname@example.org to discuss your requirements, or contact us via our website and we’ll call you back.