Redundancy & redundancy pay

A redundancy scenario arises due to: 1) the employer ceasing or intending to cease to carry on the business for the purposes of which the employee was so employed; or 2) the employer ceasing or intends to cease to carry on the business in the place where the employee was so employed; or 3) the requirements of the business for employees to carry out work of a particular kind has ceased or diminished or are expected to cease or diminish; or 4) the requirements of the business for the employees to carry out work of a particular kind, in the place where they were so employed, has ceased or diminished or are expected to cease or diminish. Any proposed redundancy which does not fall into 1 of these 4 definitions will not be a lawful redundancy!
  • in a distribution warehouse we employ 20 people to meet the workload. Because of a loss of a major customer, the orderbook is halved. In the absence of other work coming in, 10 jobs may be at risk and the job holders may (after a fair process) be dismissed as redundant (due to reduced work)
  • in a manufacturing company the decision is taken to make goods in China instead of the UK. The UK workforce may be dismissed for reasons of redundancy (the work will no longer be done at that location).

Redundancy for any other reason than reduced work or a change in location risks becoming a different type of dismissal (redundancy is one of 5 potentially fair reasons for dismissal.) A badly executed redundancy without a proper and fair process is likely to be classed as an unfair dismissal.

Any redundancy process must include a solid business case and an adequate period for consultation, in the case of 20 or more people not less than 30 days, 45 days for 100+ redundancies in any 90 day period and in one location.

myHRdept has extensive experience of single and collective redundancies including within unionised environements. Call us on 01628 820515 to discuss your HR requirements or email us and we’ll call you!

Statutory Redundancy Pay (SRP) is based on age, weekly pay and length of service. Our free fact card explains how redundancy is calculated or you can use the government’s handy online calculator. Don’t forget, the calculator will only give you SRP – it will not calculate the cost of notice periods in the event that you intend to pay in lieu of notice.

myHRdept has extensive experience of single and collective redundancies including within unionised environements. Call us on 01628 820515 to discuss your HR requirements or email us and we’ll call you!

Provided there is a genuine redundancy situation (myHRdept can advise) then the following stages normally apply: 
  • Assessment (with myHRdept) of who definitely could be affected, who might be affected and whether there are any less obvious solutions (there often are)
  • A well constructed business case forms the base of an announcement to affected groups/individuals
  • Employees who might be redundant are placed ‘at risk’
  • Employees attend at least 2 X consultation meetings (with a companion)
  • If selection is necessary, this is shared with employees before being carried out and employees in the ‘pool’ (those at risk) must be fairly and objectively assessed against the criteria (myHRdept will advise on fairness)
  • If selected, ways are analysed in consultation with those still at risk about how to avoid the redundancy, or if unavoidable about how to mitigate its impact
  • Once the decision to serve notice of redundancy dismissal has been made it is good practice (though not strictly legally required) to allow an appeal opportunity.

The above is an indication only.  There are a myriad of possibilities on the approach, which might include the use of voluntary redundancy schemes and/or settlement agreements to mitigate any legal risk. The golden rule in any redunancy scenario is to cut the fat, not the muscle and so it is vitally important to ensure that whatever method is used, the people with the best skills, experience and work ethic are retained.

myHRdept has extensive experience of single and collective redundancies including within unionised environements. Call us on 01628 820515 to discuss your HR requirements or email us and we’ll call you!

The first £30,000 can be paid tax free. Notice pay however is subject to the usual deductions.

myHRdept has extensive experience of single and collective redundancies including within unionised environements. Call us on 01628 820515 to discuss your HR requirements or email us and we’ll call you!

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