Employer Redundancy Law

When does a potential redundancy situation arise ?

In legal terms, a redundancy situation may arise where :-

The business moves to a different location

Care should be taken on consultation (see below) and clearly, this reason for redundancy predominantly focuses on whether the employee wants to or can be expected or required to move to a different town oir city to continue the employment. Simply because the employer decides to move location does not automatically create a reason for changing or reducing employees.

Business no longer continuing

Obviously this can apply where the entire business shuts down but it can also apply where part of the business in which certain employees were working is being closed and consequently there is no longer a requirement for that employee or employees to undertake the role they were employed for.

Reduction in workload

If the employer no longer needs as many employees, staff can be made redundant, but an employer needs to be wary since an Employment Tribunal will consider not only the actual role of an employee at the time of redundancy but also the type of work they could be obliged to do in their employment contract and this can be significant when dealing with the redundancy consultation process.

What are employee’s entitled to when made redundant ?

To be eligible for a redundancy payment an employee needs to have completed 2 years continuous service, However, employees, whether full time or part time, can claim that they have been unfairly dismissed by way of redundancy if they have been continuously employed for more than 1 year. If selection for redundancy was discriminatory, the employee does not have to have been employed even for 1 year. Consequently, employers really need to adopt fair, consistent, objective and non-discriminatory processes for all employees, regardless of length of employment.

What is “bumping” ?

This is where an employee whose position is redundant is moved to another position which still exists but resulting in the employee in that position being made redundant. This process is legally permissible but for obvious reasons the employer should be extra careful to be able to justify this process.

Good procedure when considering redundancies

Procedure and objectivity are extremely important in an employer being able to explain and justify, if necessary before an Employment Tribunal, it’s actions and decision making process. ACAS guidelines are always a good starting point.

Employers generally do have leeway in the decision making process in terms of what precise criteria to employ when selecting for redundancy but it is always worth :-

1. Ensuring that there is a consultation process with fair warning for  employees, that they are able to participate and make representations and suggestions
2. That the consultation process is documented fully
3. All alternatives are considered before any final decision is reached
4. That employers utilise more than 1 criteria for making selections i.e not just for example first in last out
5. Ensuring that any criteria are non-discriminatory

In terms of consultation, it is good practice to consult with employees about criteria for selection if possible. One commonly adopted method for selection is point scoring. A useful starting point for any such system may include the following factors :-

• Skills needed by the business
• Performance to date
• Disciplinary record
• Sickness record (although this can be complicated by the need to avoid discrimination such as for any absence for disability or pregnancy reasons)
• Length of service

An employer should explore all and any alternatives before redundancy, in terms both of any alternative employment, including with any associated company or business, the possibility of job sharing, sabbaticals or reduction in hours.

Before finally dismissing ….

• Complete the consultation process and check contract, policies and procedures to ensure they have been complied with
• send a written statement to the employee stating reasons for selection
• Invite the employee to a meeting, where they are entitled to be accompanied by a colleague or Union Rep.
• Following the meeting inform the employee of the decision
• The employee needs to be advised of the right to appeal. This should be in writing