Redundancy is a sensitive topic and needs to be handled with care and compliance which is why it's often necessary to seek the help and support of a professional third party such as our Employment Law Consultants.

Employment Law On Redundancy 

Redundancy is a sensitive topic and needs to be handled with care and compliance. This is why it’s important to seek the help and support of a professional third party such as our Employment Law Consultants.

What is redundancy? 

Redundancy is a form of dismissal that takes place when an employer needs to reduce the size of its workforce. Employee dismissals due to redundancy occur due to

• The actual or intended closure of the whole business;
• The actual or intended closure of the business at a particular workplace;
• A reduction in the need for employees to carry out work of a particular kind.

TUPE & redundancy 

If you are contemplating redundancies due to the loss of a contract or the sale of a business or part of the business, this may be a relevant transfer for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (also known as TUPE). 

Under these circumstances, your staff may have the legal right to have their employment transferred, and therefore you won’t need to make anyone redundant.  If such staff members are made redundant where there has been a transfer that is covered by this legislation, then such redundancies could be automatically unfair. 

There might be alternatives to redundancy that are more cost-effective to your business and either avoid or minimise the cost of redundancy, but our team can help explore these with you. Please call us on 0845 2626 260 or drop us an email if you need further advice on whether you are within your right to carry out a redundancy.

Redundancy: examples of fair redundancy situations 

There are various reasons why redundancy may take place, such as: 

• Employers need to reduce costs or overheads
• A downturn in the amount of work available 
• Restructuring of the business
• Relocation of the business
• The employers closing the workplace and ceasing trade 
• Employee’s role ceases to exist as the work is being done by other employees

Should there be a genuine reason for redundancy, an employer is required to follow the correct redundancy procedure. Should they fail to do so, the dismissal may be deemed unfair. 

What is a fair redundancy process? 

If you have established that redundancy is necessary, it is important that you follow a fair redundancy process. First, check whether you have a redundancy policy to guide you or a collective agreement with a trade union that stipulates how you should go about the redundancy. 

Next, you will need to put a plan in place, which should include the following: 

• All options considered before choosing to go through with redundancy
• The reason for redundancy and supporting evidence 
• The number of roles that will be made redundant 
• Timeframes
• Selection criteria 
• Whether redundancy pay and notice periods are contractual or statutory 
• An appeals process

You then need to ensure that you follow a proper and meaningful consultation period. If you are making more than 20 people redundant over a 90-day period, then this consultation will need to last for minimum periods and be conducted with representatives rather than through an individual consultation process. 

Once you have a plan in place, you will begin the individual redundancy process, which can be broken down into the following four stages: 

• Announcement: It is advised that you make a verbal announcement, either to the whole workforce or just to the individuals affected, followed by a written confirmation.
• Consultation: The purpose of the consultation process, which should take place after the announcement stage, is to explore ways of avoiding redundancies and minimising the effects on the affected employees.
• Confirmation of Redundancy and Payments: You will need to calculate statutory redundancy payment if the employee has more than two years of service.
• Appeals: Staff who are made redundant have the right to appeal this decision. This will typically be a consultation meeting held by a more senior member, such as a managing director.

It is important to keep a record of each stage and send letters at all appropriate stages to ensure that there is a paper trail of the process you went through in case this is ever challenged.  

Should you require any assistance, please do not hesitate to call us on 0845 2626 260 or drop us an email to see how our specialists can support you with this documentation and the entire process. 

Redundancy costs to the employer 

Statutory Redundancy Pay is given to those employees who have worked for an employer for two or more years. It’s calculated with reference to a statutory formula that is based on age, weekly pay, and length of service.  However, the pay is capped, as are the years of service up to a maximum of 20.

In addition to statutory redundancy pay, it is also necessary to pay notice pay, which can be anything from 1 week to 12 weeks, and potentially more if there is a longer than statutory notice period in the employee’s contract of employment.

Please call us on 0845 2626 260 or drop us an email if you need further advice on how to calculate the cost of redundancy.

Redundancy FAQs

Do I need to invite volunteers for redundancy?

There is not normally a legal obligation to invite volunteers for redundancy but be sure to understand your rationale if you are not going to do this, as redundancy is generally about the role, not the person. If you put out an option to volunteer for redundancy, be sure to reserve a right to refuse this, especially if someone volunteers for redundancy who you cannot do without. 

How do I select staff members for redundancy?

Redundancy affects roles rather than specific staff members, so it is important that you select the people for redundancy fairly and objectively. Don’t make decisions that could be considered discriminatory on protected grounds (like last in, first out, which can be indirectly discriminatory towards younger workers), and ensure that you use criteria that can be quantified in a measurable way. 

This means avoiding anything subjective, like “commitment” or “enthusiasm”.

If staff perform similar duties, then it is necessary to “pool” them together and make a selection between the people who perform similar roles.

What do I need to include in a selection matrix?

If you have people who perform similar duties or have overlapping roles, then you will need to “pool” these together and perform an assessment to select fairly the person you want to let go.

When you use your selection or skills matrix, be sure to avoid anything that could be discriminatory (for example, absence levels if someone has an underlying disability or takes time off to look after children). Try to ensure that your criteria are objective and measurable.

Sometimes it is necessary to have two assessors so that you can get more objective scoring and be sure to get the right people to complete the assessment, who work closely with the affected staff members.

Do I need to offer redundant employees other jobs within the business?

Potentially, if there are alternative vacancies within the business, these should be advised to anyone who is at risk of redundancy. 

In some circumstances, for example, for people on maternity or adoption leave, there is a positive duty on the employer to offer suitable alternative employment to this person, and often this is in priority to anyone else.

The duty also extends to any “associated” employers, which, even though they may be totally separate legal entities if they have similar shareholders, then potentially the duty to offer alternative employment might extend to these vacancies.

How can employers avoid compulsory redundancies?

Redundancies are difficult for employees and employers; however, there are some tactics employers can use to try to avoid compulsory redundancies, such as: 

• Offering voluntary redundancy or early retirement
• Ending contracts with freelancers or self-employed staff instead of permanent employees
• Stopping any over-time work 
• Considering flexible work where possible 
• Offering other positions to employees 
• Doing temporary lay-offs
• Furlough staff and rehire them at a later stage 
• Try not to employ casual workers

Get expert help with making staff redundant

Our Employment Law Consultants can guide you through every step of a redundancy procedure, including the initial planning stages. This will ensure that you are 100% compliant with the law whilst making the best decisions for your business, and it will alleviate some of the stress and difficult decisions associated with making an employee(s) redundant.

At an additional cost, we also offer follow-up support for the employee(s) with our Employee Redundancy Support Service, which gives them one-on-one time with our recruitment expert.

You can either become a retained client where you will pay the same monthly cost per month for unlimited HR and Employment Law support, or you can take one of our purpose build redundancy solutions below:

BASIC	STANDARD	BESPOKE	BESPOKE PLUS
Self-help redundancy guides covering rationale, selection, consultation, sample selection matrix, information on calculating payments, plus sample letters.	Initial call with a HR consultant. Access to a suite of guides covering rationale, selection, consultation, sample selection matrix, information on calculating payments, plus sample letters. Standard Scripts for meetings.	Up to 10 calls with a HR consultant who will offer you advice on the process and hold your hand through the entire process start to finish. Bespoke fully drafted letters. Calculation of any redundancy payments and notice. Bespoke scripts for all meetings.	Unlimited advice from a HR consultant. Support at the announcement and all consultation meetings with a HR consultant. Support with any appeal hearings. All letters drafted. Guaranteed Representation with any claims that arise as a result (raised within a 3-month period) Redeployment services for any dismissed employee.
£295 plus VAT Enquire Now	£395 plus VAT Enquire Now	£995 plus VAT (up to 10 staff members) £1,495 plus VAT (up to 20 staff members) £1,995 plus VAT (up to 30 staff members) £2,495 plus VAT (up to 50 staff members) Enquire Now	£995 plus VAT per employee Enquire Now

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If you need professional support and advice in planning, starting or completing a redundancy process then call us today on 0845 2626 260