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 or her personal deficiency. Redundancy also gives employees more rights than an employee who was sacked because he or she did not fulfil the employment contract.
Good employment law advice would highlight as an important consideration whether a redundancy is genuine. That is to say that employers need to avoid using the redundancy process as a means to get rid of an employee or employees. Redundancy could amount unfair dismissal, constructive dismissal, or other employment law breaches if not carried out for genuine reasons or if not done on a fair and objective
What are examples of a genuine redundancy?
Redundancies should be made for business reasons. Employment law advice would point to the introduction of new technology or a new system that makes a job unnecessary, the need to cut costs, or that a business is moving location.
A good employment solicitor would insist that a redundancy must fit 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.
What are examples of a bogus redundancy?
If the reasons for a redundancy are not valid, then an employment tribunal claim can be made against an employer. A redundancy is automatically unfair if there are particular reasons for it. If the employee:
– is pregnant or on maternity leave,
– on family related leave – for example parental, paternity or adoption leave,
– asked for a benefit they are legally entitled to, such as a minimum wage,
– took action to ensure health and safety in the workplace,
– works in a shop and refused to work on a Sunday,
– took part in trade union activities,
– is legally a whistleblower.
What is the selection process?
If the reasons are genuine, the employer must select the employees on a fair and objective basis. An employment tribunal would expect an employer to use a criteria to do this. The employer should not discriminate during the process or use a criterion that, in effect, indirectly discriminates against particular employees. Employers risk a legal claim if redundancy is made on the basis of an employee’s part-time or fixed-term contract. The Equality Act 2010 also provides particular reasons as to why an employee should not be directly or indirectly discriminated against. It protects workers based on particular characteristics they have. The protected characteristics are:
Employers typically use other factors that assesses a candidate for redundancy as part of their criterion. These are:
– time keeping and attendance – based on accurate records
– disciplinary record – also based on accurate records
– skills or experience
– standard of work performance and
– aptitude for work.
What is the redundancy process?
A good employment solicitor would recommend a number of steps an employer should take in order to have a redundancy process. As stated, the process should be fair, objective and not discriminatory. The steps are:
– checking whether redundancies are needed|
– creating a redundancy plan
– offering voluntary redundancy
– saving costs by having staff work more flexibly
– moving employees into other parts of the organisation
– informing employees
– holding redundancy consultations
– checking whether collective consultation is needed
– selecting employees for redundancy
– working out redundancy pay
– giving redundancy notice
– offering an appeals process
– offering alternative employment
– supporting staff and plan for the future. The Arbitration and Conciliation Service recommends that redundancies during Covid-19 pandemic should be avoided.
What consultation is required?
It is good practice to hold consultations with staff before employees are selected for redundancy. The consultation should be with recognised trade unions or staff associations. If consultation is not done properly for large scale redundances, 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.
By law, an employer must hold collective consultation if:
– there are plans for 20 or more redundancies
– the redundancies are in one workplace, if not the whole organisation
– plans are to make the redundancies within 90 days.
The consultation process for the collective redundancy usually 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.
Can you volunteer for redundancy?
An employee can request that he or she be made redundant before any employees are selected. An employee can write to the employer volunteering for redundancy or write when the employer formally asks employees to put themselves forward for redundancy.
An employer is not legally obliged to accept a redundancy request if the redundancy is not in the interests of the business. Also, an employer is not legally obliged to ask all employees to put themselves forward. An employer though should not discriminate in a way that would breach the Equality Act 2010.
How much redundancy pay?
A redundant employee who has worked for the employer for two years is legally entitled to receive at least the minimum statutory pay and up to the maximum statutory pay. Employees have the same statutory redundancy rights during Covid-19 pandemic, including furlough. An employee may have further rights and pay entitlements if they are specified in the employment contract. There are a number of jobs where the employee does not have entitlement to redundancy pay, e.g. employee laid off or kept on short term.
The employer should tell the employee how and when payments will be made. The deadline for payments is the final pay day for the employee, unless another date has been agreed.
The calculation of redundancy pay is based on:
– employee’s age
– how long they have worked for the employer up to 20 years length
– each year of work is equivalent to half to one and a half weeks’ pay depending on age.