Expert Redundancy advice from Solicitors in Manchester and London
Redundancy is dismissal from a workplace position, caused by the employer needing to reduce the workforce due to the cessation of a workplace position, as a result of economic reasons.
For redundancy to be constituted as a fair reason for dismissal, it is important for employers to comply with the correct steps during the redundancy process to ensure that the employees chosen for redundancy are treated fairly. Otherwise, this raises the risk of employees making a claim at the Employment Tribunal for unfair dismissal and discrimination against your business, which may ultimately lead to compensation pay-outs and adverse publicity of the business.
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.
The Redundancy Process
The law requires employers to ensure the redundancy procedure is fair, ensure employees are entitled to their redundancy rights, and to act reasonably when making employees redundant.
The selection criteria of who to make redundant needs to be objective, fair and consistent. The employer can take into consideration factors such as the skills and work history of the employees, disciplinary records, worker appraisals, and experience when judging which employees to make redundant.
If the selection process was not fair or is seen to discriminate employees on the grounds of age, disability, race, religion or sex, then the employee can challenge the redundancy process on grounds based on discrimination, or for unfair dismissal. Employees only have the right to make a claim for unfair dismissal if they have been in employment for their employer for over 2 years.
Redundancy Rights of Employees
Employees are entitled to certain redundancy rights depending on the length of service:
- Consultation with employee
- Alternative employment
- Redundancy pay
- Notice period
- Time to move into a new job
Employees who are at risk of being made redundant must be consulted by their employer. Once you have notified the employee in advance that they have been provisionally selected for redundancy, you should invite the employee to a consultation to explain the reason behind making the employee redundant, explaining the selection criteria, why the employee has been shortlisted for redundancy, and to discuss the option of other alternative positions to maintain the employee’s position.
An employee has the right to take the matter to the employment tribunal if you fail to provide consultations with the employee.
Employers have an obligation to assess whether there are alternative positions within the company, to either avoid making redundancies or reducing the number of redundancies.
Making arrangements for alternative employment include:
- Reducing hours
- Reduce overtime opportunities
- Reviewing suitable alternative vacancies
- Suspending or restricting recruitment
- Terminate or reduce the number of agency workers
- Not renewing contracts for contractors
- Inviting voluntary redundancies
The employer has an obligation to ensure that they have tried every possible solution to try to refrain from making employees redundant. Redundancy must only be seen as a last resort.
If the employer has no alternative but to make redundancies, then they must understand their obligations during the redundancy process to prevent claims arising from unfair dismissal and discrimination.
During the latter stages of the redundancy process, an employer may provide a Settlement Agreement, also known as a Compromise Agreement, which is a legally binding document, for both the employer and employee to sign. This provides a peace of mind to employers that the employee shall waive any existing or future claim against the employer, in exchange for a fee.
If the employer breaches any element of the redundancy process, an employee can raise a claim. It is important for employers to know the ins and outs of redundancy and to follow the right procedures, as a breach of any element of the redundancy process risks the employee making a redundancy claim for either unfair dismissal or discrimination.
If an employee decides to make a tribunal claim against you, they must do so within 6 months if the claim relates to redundancy pay, and 3 months if the claim is in regards to unfair dismissal or discrimination.
How Can Monarch Solicitors Help?
If you are considering making employees redundant, our redundancy solicitors can help businesses by providing support and guidance on:
- Preparing for consultation with employees
- Advise on each stage of the redundancy process
- Advising you on how to conduct a fair redundancy process
- Advise on redundancy entitlement and payments of employees
- Advise and assist in drafting settlement agreements
- Advise if you have received an unfair dismissal or discrimination claim from the employee who you made redundant
Contact our Litigation Solicitors:
If you would like to enquire for any matters regarding discrimination of employment dismissal please complete our online contact form here or send an email to us at [email protected] and one of our solicitors shall call you back.
Alternatively, please call our litigation solicitors in Manchester on 0330 127 8888 for a no obligation discussion.
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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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