In some circumstances, it’s necessary for companies to make some, or all, of their workforce redundant. This can be needed for various reasons, one of the most common being to continue to run a profitable business. If your business has found itself in this position but you have not yet been through redundancy, this guide will help you understand the redundancy process, what different types exist, how to avoid common mistakes and some of the top frequently asked questions about redundancy.
Redundancy is a sensitive topic for most people, and it is imperative that businesses follow the proper legal steps. This is to avoid causing unnecessary distress to employees, and to ensure that there is no legal backlash such as ongoing disputes. If you would like to speak to one of our qualified redundancy solicitors about navigating this process, you can call us on 02380 218000, or contact one of our six southern office branches.
What is redundancy?
Redundancy is when an employer is required to dismiss one, multiple or all of their employees because the associated jobs are no longer needed. Businesses may go down the route of redundancy due to one of multiple reasons, including:
- The business is restructuring or changing how it does things
- It is closing down or moving to a different location
- The business needs to cut costs to remain profitable
- Advancements in technology have made certain jobs dispensable
- The job a person was hired for no longer exists.
It is important to note that redundancy is different to other forms of dismissal. Redundancy is not possible to enforce due to performance, misconduct or disciplinary-related issues; it is only applicable when it satisfies one of the reasons listed above.
What types of redundancy are there?
Voluntary and compulsory are the two main types of redundancy, but collective, and pool redundancy are two others that may be applicable.
Collective is when 20 or more people are being made redundant on a compulsory basis. Pool is when more than one person carries out the role being considered for redundancy, and only some of these people will be made redundant. This is also compulsory.
Depending on the necessary route, there are certain procedures that need to be followed to ensure that each meets the correct legalities and is conducted in a professional manner; details of which will be discussed below.
Before redundancy is explored, it is important to attempt to avoid having to make any compulsory redundancies, through means such as: filling other vacancies with existing staff, reducing or eliminating overtime, or laying off contractors and freelancers (among others).
What is the redundancy process
If avoidance attempts are ineffective and redundancy is a reality, it’s sensible to consider starting with voluntary options for your employees. It must be communicated that an application doesn’t guarantee redundancy, and the selection process must be both transparent and fair.
If compulsory redundancies (less than 20) are needed, there are certain steps you must take:
- Notify your employees of, and complete a redundancy consultation.
This is a requirement, and employers must outline the business reasons, the number of redundancies, what areas of the business are affected, the plan for selection, how the redundancies will be carried out, and how redundancy payments will be calculated.
- Send an ‘at risk of redundancy’ letter.
This will need to detail why redundancies are being made, and the length of time you expect the consultation period to last.
- Make a decision on who will be made redundant.
This must be done in a fair manner, without discrimination of any kind, or based on personal preferences.
- Notify all affected employees.
Let your employees know if they are being made redundant or not, if the former, you’ll need to clearly state the reasons why. A face-to-face meeting is the fairest, and best way to do this, or a video call if it’s not possible to meet in person.
- Provide a redundancy notice letter.
Your decision and reasons for redundancy must be set out in a letter for those affected. This will need to meet the necessary legal guidelines.
It’s also important to note that you must complete the process with enough time to give the affected employees the proper notice. The amount of notice will depend on their length of service with the company.
- One month to two years = at least a week
- Two years to 12 years = a week’s notice for every year they’ve worked for you
- 12 years or more = 12 weeks
You will also need to ensure that the correct amount(s) of redundancy pay have been calculated, and continue to pay their standard salary during the notice period, or in advance if you have agreed they will leave the business early.
Things to remember
When undertaking the redundancy process, the key things to remember are that you need to ensure clear and consistent communication throughout, and provide suitable support for staff. By following the steps outlined above, alongside seeking any additional legal advice, you can navigate a tricky and stressful situation properly, protecting both your business and your employees as much as possible.
Common redundancy mistakes
- Not considering the alternatives to redundancy
Before deciding upon the route of redundancy, an employer must seriously consider and explore whether there are any other options. This could include other positions or different hours, which should be discussed with the affected employee(s).
- Not providing a genuine reason
One of the key things an employer must communicate is the reason(s) for the redundancy. Without a clear and legitimate reason, employees may be able to raise a dispute and this could cause irreparable harm to the company.
- Hiring new employees for similar roles immediately following redundancies
The problem here is that although there are no laws in place to stop you rehiring, you need to take care of how you approach things. The needs of companies (especially those of startups and small businesses) can change rapidly, but if recent redundancies are immediately followed by the same or similar job ads, and there isn’t a good reason for it, you could face wrongful dismissal claims.
- Late, or inadequate consultations
Being at risk of redundancy can be an incredibly tough time for employees, so it’s imperative that the time is taken to allow for comprehensive consultations with those potentially affected. By providing enough time before decisions have been finalised, you are allowing employees a fair opportunity to potentially influence their outcome.
Do I need a solicitor for redundancy?
It isn’t a legal requirement to employ the services of a redundancy solicitor when beginning redundancies, however, due to the intricate nature of the process, it can be a good idea to ensure you are meeting all the correct legalities when it comes to pay, treatment, notice and communication.
In summary, if you follow the correct steps for redundancy and show your employees you’re compassionate, there’s not much room for error. If you’re in need of legal advice and support surrounding redundancies, our experienced legal professionals at Eric Robinson would be happy to help.
Frequently asked questions about redundancy
How long after redundancy can you rehire?
There is no law to say you cannot rehire soon after making redundancies, however as previously mentioned, you need to be able to prove there is now a legitimate requirement for any similar roles advertised for.
Can you make someone redundant on sick leave?
Yes, someone on sick leave can be considered for, and made redundant, as long as their health is not part of the decision-making process and proper consultations still take place. The same as anyone else, the selection process must be fair, and not discriminate in any way.
Can you make someone redundant on maternity leave?
Yes, someone on maternity leave can be considered for redundancy. Similar to the answer above, the selection process needs to be fair, and proper consultations need to be adhered to before a decision is made. The fact that an employee is on maternity leave is not a reason they should be considered for redundancy.
How long is the redundancy process?
This will depend on how many employees are being made redundant. The consultation period would, and should, last longer the higher the number. For fewer than 20 employees, consultations may be expected to be completed within 30 days, as this is a reasonable time frame.
How do you calculate redundancy payment?
Calculating redundancy pay is based on length of service and age. Under 22 is half a week’s pay for each full year of service, 22–40 is one week’s pay for each full year of service and 41 and over is one and a half week’s pay for each full year of service.
Can employees appeal redundancy?
Yes, if they feel they have been unfairly treated or made redundant for an illegitimate reason, they will have grounds to appeal it.
