Redundancy

Are you being made redundant?

Being dismissed or dismissing someone is a very difficult position to be in. It may come as a shock to both an employer and employee to suddenly have to think about redundancy dismissals. While you are dealing with redundancy, it is important to know that employers are required to follow certain procedures because employees have a number of rights in a redundancy situation. Failure by the employer to carry out the correct procedure could mean the employee is able to make a challenge of unfair dismissal.

Employees and Employers should ensure they know:

• That redundancy is a form of dismissal
• When they must inform and consult collectively (with trade unions or employee representatives)
• How to deal fairly with individuals being considered
• What the alternatives to redundancy are and
• How to determine an employee’s entitlement to a statutory or contractual payment.

There are only three situations where dismissal by reason of redundancy is valid:

• when the business is ending,
• when the business is no longer going to be carried out at a particular site or
• when there is a need to reduce the number of employees who carry out a particular type of work.

Where 20 or more employees are being made redundant, an employer has a duty to inform and consult appropriate employee representatives. Where 100 or more redundancies are proposed, consultation must begin at least 45 days before the first dismissal takes effect. For less than 100 redundancies, the consultation period is 30 days.

Fair consulting

To deal fairly with all employees, an employer should identify an appropriate pool, consult with each individual in that pool using objective selection criteria and consider suitable alternatives. An employer must be careful to ensure that selection of the pool does not leave it open to accusations of discrimination – age discrimination is a common issue in schemes which use age and/or length of service to select employees for redundancy. Discriminating against employees such as selecting them for redundancy based on a reason connected to pregnancy or working time regulations could also be considered automatically unfair.

Throughout the consultation, an employer should always consider whether it can avoid making redundancies by considering suggestions from appropriate employee representatives and possibly:

• Suspending or restricting recruitment.
• Reduction or removal of overtime opportunities.
• Ceasing or reducing the use of agency workers
• Inviting employees to volunteer for redundancy
• Inviting employees to apply for other vacancies.

Considering the settlement

Finally, in determining an employee’s settlement when they are being dismissed by reason of redundancy, an employer must consider both statutory and contractual payments. Employees with a least two years’ continuous employment who are dismissed by reason of redundancy are entitled to a statutory payment. This is calculated according to a formula based on age, length of service and pay. An employee may also be entitled to an enhanced contractual payment, if it is set out in their contract of employment such as within a collective agreement or company redundancy policy.

For more information on redundancy, contact the employment team at Levins on 0151 480 5777 or fill out our contact form on our Employment Law for Employees Page