Redundancy

Redundancy is the dismissal of employees because the employer needs to reduce the workforce. Employment law regards redundancy as different from a typical dismissal because it is not focused on the employee and their capability or conduct. In redundancy, it is the job and the services it provides that is deleted or reduced rather than the employee who is sacked because of his personal deficiency.

Redundancies should be for business reasons that could include new technology or a system that makes a job unnecessary, the need to cut costs, or that a business is moving location.

An employer must ensure that a redundancy fits the statutory definition under Section 139 of the Employment Rights Act 1996. Redundancy legal advice suggests that a redundancy situation arises where the employer ends or will end the:
– business for which the employee was employed,
– place of employment from where the business took place, or
– type of work for which the employee was hired.

Fair and objective

The best employment lawyers would advise that employers follow a redundancy process that is fair and objective. It is important to ensure that the selection of employees is based on evidence and not just on the employer’s feelings. The redundancy process should not discriminate against employees on the grounds of ‘protected characteristics’ such as race, gender and age.

An employer must give the employee notice of the redundancy. The length of the notice depends on how long the employee has been working for the employer. The employee must have redundancy pay that, again, is dependent on length of service. Some employment contracts may provide for a ‘payment in lieu of notice’ and get paid rather than work the notice.

Consultation

Redundancy could amount unfair dismissal if employees are not adequately consulted and explanations given. An employment tribunal would take into account discussions about redundancy selection, avoiding redundancy, the employee’s concerns and time off to look for work.

‘Collective redundancy’ is where more than 20 employees are made redundant within a 90-day period in one establishment. Again, if consultation is not done properly, the employer could face a legal claim and an award of up to 90-days’ pay under Section 189 Trade Union and Labour Relations (Consolidation) Act 1992.

The consultation for the collective redundancy process includes writing to the employee concerning: 

  • – the reasons for redundancies
  • – jobs that could be deleted
  • – the number of people facing redundancy
  • – how employees are selected for redundancy
  • – the plan for redundancies
  • – how redundancy pay is calculated, and
  • – details of any agency workers they’re using.

If there is another, vacant job similar to the one being deleted, the potentially redundant employee has the right to be offered that job first.

Employees facing redundancy have a number of other rights. The redundancy dismissal process is devilishly difficult and employment solicitors strongly advise taking legal advice.