Redundancy is dismissal from a workplace position, caused by the employer needing to reduce the workforce.
Below are some of the reasons for an employer to make an employee redundant:
- The business is moving or closing down
- The job position no longer exists
- The need to cut costs from your company, in other words, the number of staffs must be reduced
- New technology, new machine or even new system make the job unnecessary
- Therefore, if you are dealing with staff redundancies, it is essential that you treat your employees fairly and comply with the legal requirements.
This is because you, as an employer may face an unfair dismissal claim at the Employment Tribunal.
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An employee is regarded as redundant where a dismissal is wholly or mainly attributable to:
- Move of place of business – When a business moves from the place where the employee was employed, the distance between the old and new premises and inconvenience to the employee are used to decide whether the move is sufficient to warrant a redundancy. The test is where the employee worked, not where they could be required to work under their contract of employment.
- Cessation of business – This is where an employer has ceased, or intends to cease, the business for the purpose for which the employee was employed. It also applies where the part of the business where the employee works is closed, but the rest of the business continues.
- Surplus labour – Work re-organisation or new labour-saving devices can lead to redundancies where fewer workers or different skills are needed. Where fewer employees are needed for existing work or there is less work for existing employees, an Employment Tribunal will consider the work an employee could be required to do under the contract of employment, not simply the work they actually did at the time of dismissal.
If fewer than 20 employees are to be made redundant, each employee has the right to an individual consultation. During this process, you should give you reasons why they have been selected for redundancy and allow you to explore with them the alternatives to redundancy.
If the redundancy involves more than 20 employees, then the employees are entitled to have their representatives (such as a trade union official) consulted on their behalf.
Notice and Redundancy
- Employees are entitled to notice if they are to be made redundant. The periods are as follows:
- 1-week notice for employment of a period longer than one month, but less than two years.
- One additional week for every year between 2-12 years
- 12 weeks if the employee has been employed for more than 12 years.
In some situations, you may choose to give payment in lieu of notice. This payment should at least match the pay your employee would receive during the notice period.
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