Making Redundancies
Deciding on employment severances can be a tough process, especially in circumstances where a team have worked together over many years. Making a mistake, however, can cost your business with employment tribunals and hefty legal penalties. The team at Leonard Solicitors have put together some general recommendations in the event you are burdened with this difficult, yet often necessary task.
As an employer, you should follow a fair redundancy procedure, especially where employees have served for at least 2 years. Generally, each business will have its own redundancy policies in place that should reflect any terms made in employment contracts. Each business will have its own procedure; however, they should at least make staff aware of the following:
- How you intend to choose people for redundancy
- How long your decision will take
- Their individual and group meetings they can go to and when
- How they can appeal if they are chosen for redundancy
This is typically called the ‘consultation period’ and employees should be invited to at least 1 meeting to discuss the procedure that will take place with either Human Resources or their line manager (unless their employment is also under review).
Unless otherwise stated within the employment contract, employees serving less than 2 years will not be required to go through a redundancy process, or any individual meetings, however, there are other rules that must be met. These rules must be followed no matter how long the employee(s) has worked for the business –
Employers should not make decisions on redundancies over:
- Protected characteristics
- Unfair reasons
- Making at least 20 people redundant without holding a group consultation
Unfair reasons can be complicated, but they mainly protect employees over their type of employment and certain situations which may have happened during their employment. These are called ‘automatic unfair reasons’ for example:
- They work part-time or are on a fixed-term contract
- They refused to work outside of their contracted hours
- Have asked for their employment rights such as maternity leave, minimum wage etc to be exercised
- Have been on jury service
- Are in a trade union or have been on an official strike
- Have previously or are currently taking action for health and safety risks/accidents
- They have reported you for doing something illegal
Employees serving over 2 years
For employees with over 2 years of service, there are additional measures that must be followed:
- The reason for redundancy is genuine
- You have followed a fair process
- You have offered the employee an alternative position where available and suitable
Genuine reasons for redundancy mainly comprise of business failure or that their skills are no longer required. More specifically, you can make an employee(s) redundant if:
- The business is failing or has become insolvent
- Their skills are no longer needed
- Re-organisation has meant that their work is being done by other employees
- Relocation of the business, department, or role
- The business has been acquired by another company or person
In recent years, many employers have made redundancies where new technology has been introduced that require fewer people to do the job. However, this technology will need to directly replace the responsibilities of the employee and not just that the job is done differently to justify redundancy.
Employers should avoid making decisions that can make the redundancy ingenuine, which also makes the process unfair. For example:
- You have recently employed people to do similar work
- You have a negative relationship with the employee
- You have previously or are now treating the employee differently from others at work during the consultation
In summary, we recommend that employers proceed with redundancies that are fair to all employees. Employment law is vast and often complex, however if your business has a redundancy process in place, which is followed by those carrying out the process in a fair and concise manner, where all individuals’ needs are met, then you have a much better chance of avoiding disputes.
If you have a question relating to redundancy or maybe you would like advice around your redundancy procedure, why not contact our Business Team? You can find out more by visiting Corporate Law Services or you can call 023 8023 4433 to get started.
Disclaimer: Information on this webpage is not intended for legal purposes or advice. If you require legal advice or services, you should seek a professional legal practitioner.
