From time to time businesses may need to consider cutting their workforce in order to remain competitive. Advances in technology, changes in the marketplace and issues such as Brexit are all factors that may lead businesses to contemplate redundancies. Where this is the case, the following factors should be carefully considered in order to avoid successful claims of Unfair Dismissal:
Are there genuine grounds for redundancy?
The employer must be able to demonstrate that the dismissal meets the statutory definition of redundancy, i.e., there must be a reduced requirement for workers to do work of a particular kind, either in the organisation as a whole, or at a particular location.
Ensure a fair redundancy procedure
Unless the redundancy involves a completely standalone role, the employer will need to consider the pool of employees from which the person(s) to be made redundant will be selected. Objective selection criteria should then be defined to form the basis of the selection process, and these should be fairly and objectively applied to those in the selection pool. Professional advice may need to be sought on any aspects of the criteria that could be deemed to be discriminatory, such as absence or length of service.
Consultations with affected employees
All employees who are deemed to be ‘at risk’ of redundancy following the selection process must be consulted on an individual basis before any final decisions are made. Such consultation needs to include discussion of any ways to avoid redundancy dismissals where possible, and the employee must be given sufficient opportunity to put forward any suggestions they wish to make.
In circumstances where 20 or more redundancies are being proposed within a period of 90 days, a collective consultation will be required prior to individual consultations. The employer will have a statutory obligation to inform and consult any recognised trade union, or, where there is no union, elected representatives of the affected employees. They must also notify the Secretary of State for Business, Industry and Skills of the planned redundancies. Failure to comply with these consultation obligations can result in the employer being liable for a ‘protective award’ of up to 13 weeks’ pay to each affected employee, in addition to any award made in respect of unfair dismissal claims.
Alternative employment opportunities
The employer needs to show thorough consideration of any opportunities for alternative work for the employees at risk. All vacant positions should be brought to the employee’s attention and considered by the employer, even if they are on lesser terms. Where an alternative position is identified, there is a statutory trial period of 4 weeks.
Employees with at least 2 years’ service will be entitled to statutory redundancy payments equating to 0.5, 1, or 1.5 weeks’ pay for each year of service (up to a maximum of 20 years), dependent on the employee’s age. A week’s pay for these purposes is capped at £525 per week. Some contracts of employment may include more generous redundancy entitlements, particularly larger companies or those in the public sector.
Failure to follow a fair redundancy process as summarised above can leave the employer at risk of unfair dismissal claims. If properly planned and executed, however, redundancies need not be a minefield. If you are an employer and require advice or support on making redundancies or restructuring your organisation, or on any other HR / Employment Law issue that you may be facing, please do not hesitate to contact us.