Redundancy

Employer

A redundancy situation arises when employees are dismissed because their job no longer exists. This arises when:

  • New technology means a job is unnecessary;
  • There is a need to cut costs and the number of staff;
  • The business has to be closed.

To avoid as much disruption as possible, it is essential there is good communication between you, the employer, and your staff.

It is good practice to establish a formal policy or procedure for dealing with a redundancy situation. It is a good idea to discuss this with the trade union or with staff representatives, which will help to avoid unjustified fears and suspicion that redundancy is imminent and enable members of staff to contribute their ideas.

Failure to follow a reasonable procedure when dealing with redundancies can lead to staff making claims of unfair dismissal.

Different procedures will apply depending on the size and nature of the business.

However a formal procedure will normally contain the following:

  • A statement of intent to maintain job security wherever possible;
  • Details of the consultation arrangements;
  • The measures in place to minimise or avoid compulsory redundancies;
  • General guidance on the selection criteria;
  • Details of the severance terms;
  • Details of any relocation expenses, hardship or appeals procedures;
  • Policy on helping redundant staff find alternative jobs or access training.

Consideration must be given to:

  • Natural wastage;
  • Restrictions on recruitment;
  • Reducing overtime.

There should be a timely and full consultation with members of staff and the selection process should be properly followed. It is important the selection criterion is objective to ensure an employee is not unfairly selected and it should be applied fairly and consistently.

Those staff who are selected must be given notice before their employment ends and must be given the opportunity to appeal.

Fosters can assist in drawing up a suitable Redundancy policy that can then be incorporated into the Company's Staff Handbook.

Fosters can also assist with guiding you through the complicated redundancy procedure.


Employee

A redundancy situation arises when employees are dismissed because their job no longer exists. This arises when:

  • New technology means a job is unnecessary;
  • There is a need to cut costs and the number of staff;
  • The business has to be closed.

It is important your employer follows a proper procedure when dealing with redundancies, as otherwise you may have a claim for unfair dismissal.

Different procedures will apply depending on the size and nature of the business.

Your employer must give consideration to:

  • Natural wastage, for instance by offering voluntary redundancies;
  • Restrictions on employing new staff;
  • Reducing overtime.

There should be a timely and full consultation with members of staff and an objective selection process should be properly followed. The selection process should be applied fairly and consistently.

This could include such things as:

  • Attendance record;
  • Disciplinary record;
  • Standard of work;
  • Aptitude for work.

If you are selected for redundancy you must be given notice before your employment ends and you must be given the opportunity to appeal.

You will be entitled to a redundancy payment if you have been continuously employed for at least 2 years and are dismissed due to:

  • The business closing;
  • Closing of your workplace;
  • A diminishing need for employees to do the available work.

There is a standard calculation for redundancy pay:

  • 0.5 week's pay for each full year of service where the employee's age is under 22
  • 1 week's pay for each full year of service where the employee's age is between 22 and under 41
  • 1.5 week's pay for each full year of service where the employee's age is 41 or over. The maximum number of years that can be taken into account is 20 years.

Although you will need 2 years' service to be entitled to a redundancy payment, the fairness of the dismissal can be challenged provided you have at least 1 year's continuous service if you started work for the company before 6th April 2012, or 2 years' service if you started work after 6th April 2012.

We can advise you as to whether a proper redundancy situation has arisen and whether the proper redundancy procedure has been followed.

The above is for general information only and should not be constituded as legal advice.

Contacting Us

Fosters Solicitors team of Business & Commercial lawyers have a wealth of experience and knowledge to assist you in relation to any legal query or matter you may have. Call us on 01603 620508 or complete our and a member of the department will be in touch very soon.