Redundancy: Five Questions Answered

Redundancies have been in the headlines again recently with some household names such as Primark and Royal Mail announcing proposed redundancies in their organisations.

It’s often a stressful and worrying time for employers and their employees when redundancies need to be considered and employers can find themselves with many questions, particularly if this is something they have never had to face before.

With this in mind, we look at five frequently asked questions to help employers when it comes to redundancies.

 

1. In what circumstances can redundancies be made?

When it comes to making redundancies, employers will need to have what in law is considered a ‘genuine redundancy situation’. Broadly speaking, that is diminished requirements of the business for employees to do work of a particular kind, a workplace closure (e.g a site closure / relocation) or business closure.

Whilst it can be tempting to think of redundancy as a ‘nicer’ way of exiting an employee from the business, such as if they are underperforming, or as an ‘easier’ way of managing out an employee rather than using an applicable process such as a disciplinary procedure, it’s important not to fall into these traps.

If an employee who has two years’ service or more is made redundant and there isn’t a genuine redundancy situation, they can complain to an employment tribunal that they have been unfairly dismissed.

 

2. What steps do I need to take?

As a brief outline, employers will usually need to:

  • Prepare a redundancy business case
  • Identify the appropriate selection pool – this is the group of employees that are at risk of being made redundant
  • Look for alternative employment – a failure to do so can make a redundancy dismissal unfair
  • Warn and meaningfully consult with employees who may be affected by the proposed redundancies before any decision to dismiss is made
  • Fairly select who will be retained from the selection pool (unless the employer is proposing to make all employees in the selection pool redundant). Selection is commonly done using a skills matrix, this involves identifying selection criteria and scoring employees on their performance in these areas with the highest scoring employees being retained and the lowest scoring being made redundant.

There can be a lot to think about when it comes to making redundancies so it’s important to seek advice from Kingfisher Professional Services Ltd before taking any action. We can give specific advice on your situation and help your organisation to get it right.

 

3. Is there a ‘quicker’ way to make employees redundant?

Unfortunately for employers, in most cases there isn’t a ‘quicker’ or ‘easier’ way to make redundancies if they wish to do so safely. ‘Cutting corners’ and not following a fair process can give employees who have two years’ service or more grounds for complaining that their redundancy dismissal was unfair.

In some situations, there could also be the possibility of other claims such as discrimination. That said, it may be worth bearing in mind:

 

Settlement agreements

A settlement agreement can sometimes be a useful commercial alternative to completing a redundancy process as it can be used to terminate an employee’s employment. However, it won’t be an attractive route for employers in every case and it should be borne in mind that an additional payment will be required from the employer to the employee for them entering into the agreement.

As a reminder, a settlement agreement is a legally binding contract, voluntarily entered into by an employer and employee that prevents an employee from making a claim that is covered by the agreement to an employment tribunal or court. As you would expect, for a settlement agreement to be legally binding there are certain requirements that need to be met.

If you think you may wish to use a settlement agreement in your organisation you should contact Kingfisher Professional Services Ltd for further information and advice on your situation, before taking any action, including broaching the matter with the employee.

 

Short serving employees

If an employee has under two years service it may, depending on the circumstances of the case, be possible to make them redundant without following the usual process. This is because employees are required to have two years service to claim ordinary unfair dismissal.

However, as there are plenty of claims employees can bring from day one of their employment such as automatic unfair dismissal and discrimination, it’s important to seek advice on the facts of your case from Kingfisher Professional Services Ltd before dismissing any employee.

 

4. Are there ‘special rules’ for large scale redundancies?

If an employer is proposing to dismiss as redundant 20 or more employees at one establishment  within a period of 90 days or less, additional steps will be required. These will include such things as consulting with ‘appropriate employee representatives’.

If you think large scale redundancies may be required in your organisation, please seek specific information from Kingfisher Professional Services Ltd as soon as possible. Bear in mind that a failure to comply with collective redundancy consultation obligations alone can be costly  – up to 90 days’ gross pay per dismissed employee so it’s important to get it right.

 

5. Should I document the redundancy process?

Yes, it’s important for employers to keep appropriate records when it comes to a redundancy process. This can help them to demonstrate that a redundancy dismissal was fair if it is later challenged by an employee, for example if a tribunal claim is brought.

One common mistake by employers is not making adequate records of redundancy consultation meetings. It’s important to be able to show that meaningful consultation took place and what was discussed.

If you have a possible redundancy situation in your organisation or you would like further information regarding this area, please do not hesitate to contact Kingfisher Professional Services Ltd as we are happy to help.

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