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Redundancy and re-organisation is an issue which has affected most businesses over the last few years. It is a form of dismissal and it may be fair provided it is carried out for a justifiable reason, which could include the following:

  • There is no longer a need for employees to carry out work of a particular kind or workload has reduced, for example due to the introduction of new technology or a new system has made their job unnecessary
  • The business is closing down
  • There is a change in the location of your business
  • The job the employee was hired for no longer exists
  • There is a need to reduce costs which ultimately means staff must be reduced

However, even if the redundancy is for a fair reason, it may result in an unfair dismissal if the correct procedure is not followed. It is therefore vital that the redundancy process is conducted in a proper and fair manner.  You must always consult with each affected employee individually in respect of the proposed redundancy, the selection criteria applied and why they specifically have been selected. It is also important that you consider and offer suitable alternative employment positions that may be available within the company.  (If you are proposing to dismiss 20 or more employees, the consultation process is longer and more complex. Please contact us for more details in respect of this.)

You must also apply fair and justifiable selection criteria when selecting individuals for redundancy.  The criteria could for example be based on length of service, skills, qualifications or disciplinary proceedings.  Once the criteria are selected, they must be applied without prejudice to all employees considered for redundancy.

If you fail to follow a correct redundancy procedure or fail to apply fair selection criteria, then the redundancy may be considered as unfair dismissal for which a claim can be made in the employment tribunal. Employees may also have a claim for discrimination, if the selection criteria applied is based on a characteristic (age, sex, race, religion, disability) protected under legislation. It is also essential that the employee is provided with as much notice as is reasonably possible of the risk of proposed redundancy.

Statutory/Contractual Redundancy Payment

If you are making someone redundancy who has worked for you for at least 2 continuous years , then redundancy law imposes a requirement on you to make a statutory redundancy payment.  This is calculated with reference to the individual’s age, length of service and weekly earning (capped). If the business offers an enhanced redundancy package, however, then an employee may be entitled to more than the statutory amount.

We strongly recommend that you seek legal advice before commencing any redundancy procedure. If you are considering making some of your staff redundant, Contact us on 0800 64415454 for a free consultation.

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