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Planning to make redundancies?

Redundancies – a quick refresher for employers

Fair consultation procedures

Redundancies cannot safely happen unless they are carried out under a fair consultation procedure.

To be ‘fair’ the consultation procedure includes a period of time sufficient for consultation to take place.

This cannot be less than 30 days where more than 20 jobs are to go, or 45 days for 100+ reductions in a 90 day period.

A failure to consult effectively could bring claims for protective awards of 90 days’ pay per employee in collective consultation situations and/or unfair dismissal claims.

What is a ‘redundancy’

Redundancy is one of the fair reasons for dismissal (subject of course to the employer following a fair procedure.)

An employee is potentially redundant if:

  1. The employer stops or intends to stop carrying out the business for which that employee is employed by them; or
  2. The employer stops or intends to stop carrying out that business at or near the location where the employee is employed; or
  3. In either ‘1’ or ‘2’ above the requirement for the work diminishes rather than ceases altogether.

If jobs are lost through a restructure, is that the same as a ‘redundancy’?

A restructuring of a business can result in a potentially fair redundancy situation providing the other criteria for redundancy are met (1, 2 and 3 above.)

If those criteria aren’t met then the staff dismissed as a result may not fall into the category of a ‘redundancy’ dismissal.

Usually the alternative is a ‘some other substantial reason’ dismissal. It’s important to correctly classify the dismissal, particularly if the employer is seeking to avoid making redundancy payments.

What are ‘collective redundancies’?

Collective redundancies occur where 20 or more staff are to be dismissed from the same entity.

Collective redundancies (unlike non-collective) must follow strict consultation rules and minimum consultation periods – it is essential that the employer is able to show that it consulted fairly with the employees dismissed.

What is involved in a consultation process?

The consultation process should involve dialogue with employees, or their representatives in collective redundancy situations. The consultation should i) discuss ways to avoid or minimise the redundancies; ii) if they can’t be avoided, mitigate their impact.

Early-stage consultation should cover:

  • The reasons for the proposed redundancies
  • The ‘pool’ from which individuals will be selected and the proposed number of redundancies
  • The proposed selection methods
  • Possible alternatives to redundancy
  • Ways to mitigate the impact of redundancy
  • The proposed consultation process and timescales

Only after consultation has been completed should employees be served with redundancy notice letters, normally after at least two 1:1 meetings.

Who qualifies for a statutory redundancy payment?

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.

Special protection for women on maternity leave

Should a redundancy situation arise which places a woman on maternity leave ‘at risk’ of redundancy, she must be offered a suitable available position (if there is one) even is eh is not the preferred candidate..

HR support from myHRdept

We can design 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 enquiries@myhrdept.co.uk to discuss your requirements, or contact us via our website and we’ll call you back.

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