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Redundancy has become a saddening reality following the recent coronavirus outbreak. Although it’s profoundly upsetting for the employees who are being made redundant, it’s also a challenging time for the employers who are making the redundancies.
In the current climate, businesses across the UK are dismissing valuable employees to keep their doors open. Even international powerhouses such as Virgin Atlantic made big changes as they pulled out of Gatwick Airport and cut more than 3,000 jobs. And with no sign of an immediate economic recovery in sight, the last thing companies need is a legal matter or employment tribunal on their hands.
This article aims to help employers protect their businesses and ensure employees, who have been made redundant, are getting treated fairly during the redundancy process.
If you have any further questions about your redundancy, we advise that you visit our redundancy page or contact us directly on 020 3007 5500.
What is redundancy?
Before outlining the correct redundancy process, employers and employees alike need to understand what redundancy means.
Redundancy is when you dismiss an employee because the company no longer needs anyone to do their job. There are various motives behind companies making redundancies. Some of the primary examples are because your company is:
- Closing down or changing its location
- Changing the way it works, for instance, relying more on machinery
- Changing the service/product it offers
When an employer makes an employee redundant, you must demonstrate that the job will no longer exist.
1. Explore other avenues before redundancy.
Trying to avoid compulsory redundancies proves that your company has made every effort to keep its employees in employment. Examples of ways you can avoid redundancies include:
- Dismissing any self-employed contractors or freelancers your company is employing
- Seeking applications from staff to work flexibly
- Restricting the recruitment process for the company
- Reducing or banning overtime work
- Short-time working (work fewer than the normal hours per day/week) or temporary lay-offs
- Filling vacancies elsewhere in the company with existing employees
If you are offering somebody the opportunity of alternative work, your company will need to meet a few requirements to ensure the offer is valid:
- The offer should be unconditional and in writing
- It must come before the employee’s current contract ends
- It should show how the new job differs from the old one
- The proposal must be made to the employee – they should not have to apply
- The new job must start within four weeks of the old job ending
Employees who accept alternative work are allowed a four-week trial period to see if the work is suitable. If you both agree that it is not, they can still claim redundancy pay.
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2. Identifying employees for redundancy.
If you have explored alternatives to avoid redundancy, and you decide the redundancy process is still a must, then you need to identify which employees must be made redundant.
When deciding which employees are to be made redundant, it’s of vital importance that the reason does not fall under the unfair selection criteria. Examples of unfair selection criteria include pregnancy, fixed or part-time employees, or someone’s age or race.
When making people redundant, you need to ensure you select employees fairly and don’t discriminate. The fair selection criteria include:
- An employee’s skills, qualifications, and natural ability
- Standard of work and performance
- Attendance
- Disciplinary record
- Length of service (last in, first out) if it’s justified and does not discriminate against a particular group
For more information about unfair selection, check out our blogs on protected workplace characteristics and the Equality Act 2020.
3. Holding redundancy consultations.
When the selected employees are agreed, you will need to hold redundancy consultations These redundancy consultations are vital as failing to hold them means employees may have a legal claim to contest the redundancy with the employment tribunal on unfair dismissal.
If your company is making 20 or more employees redundant within 90 days, it’s a legal requirement for your company to follow the collective consultation rules. If your company makes less than 20 employees redundant, it’s not a requirement to follow these rules. However, it’s good practice to consult with your employees as if it’s contested and taken to the employment tribunal, they may rule against your company.
Redundancy consultation process
With the redundancy consultations process, you must take the following steps:
- Notify the Redundancy Payments Service (RPS) before the first consultation. The deadline for this depends on the number of redundancies. If your company is making between 20-99 employees redundant, then you need to give the RPS notification 30 days before the redundancy. If your company is making 100 or more employees redundant, then the RPS will need to be notified 45 days before. If the RPS is not informed, your company risks fines of an unlimited amount.
- Consult with trade union representatives or elected employee representatives. If neither of these positions exists, consult with staff directly.
- Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them. The information includes the reason for redundancies, how you plan to select employees for redundancies, how you will carry out the redundancies etc.
- Respond to any requests for further information.
- Give any affected staff termination notices showing the agreed leaving date.
- Once the consultation is complete, issue the redundancy notices.
It’s important to know that following the consultation, there is a minimum amount of time before you can dismiss any employees. If there are between 20-99 redundancies, this time must be 30 days. However, if there are 100 or more employees, there must be 45 days.
4. Giving staff notice.
During the redundancy process, you need to give an employee notice and agree on a leaving date once you have finished the redundancy consultations.
When deciding upon a leaving date, you must legally give employees at least the statutory notice period. This notice period depends on how long a said employee has worked at the company.
- For someone who has been at the company between one week and two years, you must give at least one week’s notice.
- Anyone who has been at the company between two years and 12 years must provide a week’s notice for every year employed.
- Finally, for anyone who has been at the company for 12 or more years, you must give at least 12 weeks’ notice.
However, you can allow a member of staff to leave earlier than this date by offering payment in lieu of notice.
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5. Deciding on redundancy pay.
Any employees you make redundant are potentially entitled to redundancy pay. This pay is called ‘statutory redundancy payment.’
For an employee to be eligible for this payment, they must:
- Be an employee at the company, working under a contract of employment.
- Have been working at the company for at least two straight years.
- Have been dismissed, laid off, or put on short-time working.
With redundancy pay, the payment must be made when you dismiss the employee, or soon after.
Statutory Redundancy Pay Rates
The pay rates are calculated based on an employee’s age and the length of the employee’s employment, counting back from the dismissal date. But years of occupation are capped at 20 years.
Employees get:
- 1.5 weeks’ pay for each full year of employment after their 41st birthday.
- One weeks’ pay for each full year of employment after their 22nd birthday.
- Half a week’s income for each full year of work up to their 22nd birthday.
If you don’t pay the redundancy pay, or your employee disagrees with the amount, they have a maximum of three months from the date their employment ended to claim an employment tribunal.
Why consult a redundancy solicitor?
The redundancy process is very complicated. As a result, we would encourage any company that is making employees redundant to seek legal services. Our solicitors will make sure that your company is conducting the redundancy process correctly and deferring any potential legal cases against your company.
For more information, please don’t hesitate to call our redundancy solicitors on 020 3007 5500 or send our solicitors an email on [email protected].
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