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.
What is redundancy?
Redundancy is the dismissal of an employee 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.
This could be a result of a need to reduce costs/overheads, a downturn in the amount of work available, a restructure of the business or a relocation of the business. 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) instead, under which your staff may have the legal right to have their employment transferred, and therefore you won’t need to make anyone redundancy. 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.
What is a fair redundancy process?
Once you have established that redundancy is the right course of action, you will need to put a plan in place. This will include identifying the reason for said redundancy and producing evidence that there is genuine need to make redundancies. You then need to ensure that you follow a proper and meaningful consultation period, and 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. The individual redundancy process itself can be broken down into four stages following the planning stage and that is:
- 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 announcement stage is to explore ways of avoiding redundancies and minimising the effects with the affected employees.
- Confirmation of Redundancy and Payments: You will need to calculate statutory redundancy payment if the employee has more than 2 years’ service.
- Appeals: Staff who are made redundant have the right to appeal this decision and 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. Our specialist can support you with all the documentation that is required at each of the stages.
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 being about specific staff members, so it is important that you select the people for redundancy in a fair and objective way. 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 that is 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), and try to ensure that your criteria is objective and measurable.
Sometimes it is necessary to have 2 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 from 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 much does redundancy cost businesses?
Statutory Redundancy Pay is 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 employees’ contract of employment.
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:
Self-help redundancy guides covering rationale, selection, consultation, sample selection matrix, information on calculating payments, plus sample letters.
Initial call with a HR consultant.
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.
Unlimited advice from a HR consultant.
£295 plus VAT
£395 plus VAT
£995 plus VAT (up to 10 staff members)
£995 plus VAT per employee
“We have worked with Guardian Support for a number of years but they have been truly invaluable throughout the pandemic. They supported and guided us through what was a totally unexpected and unplanned need to respond quickly to the impact that COVID-19 had on our business which saw a lot of our revenue disappear overnight.
If you need professional support and advice in planning, starting or completing a redundancy process then call us today on 0845 2626 260