What is a Redundancy

Introduction

Redundancy refers to a situation in which an employee loses their job due to a lack of available work or a dismissal unrelated to their performance. It is essential to comprehend the concept of redundancy in relation to employment contract and job dismissal as it affects both employees and employers. In this article, we will explore the various aspects of redundancy, including procedures, employee consultations, selection processes, and the importance of safeguarding employees’ health and well-being throughout the process.

Redundancy Procedures

Planning

The first stage in dealing with a redundancy situation is thorough planning. Employers should strive to avoid redundancies whenever possible and consider alternative approaches.

These may include implementing recruitment freezes, reducing overtime, offering early retirement to willing employees (while adhering to age discrimination laws), retraining or redeployment, pay freezes or short-time working. However, it is crucial for employers to ensure that these alternatives comply with the terms of their employees’ contracts.

If the number of redundancies exceeds 20, the employer is required to inform the Redundancy Payments Service, acting on behalf of the Department for Business, Energy & Industrial Strategy (BEIS).

Identifying the Pool for Selection

The selection or collective redundancy pool refers to the group of employees from which individuals will be chosen for redundancy. Typically, the selection pool consists of employees who perform similar work, work in a specific department, work at a particular location, or whose work has ceased or been reduced.

It is essential for employers to identify the appropriate selection pools accurately. Failure to consult and consider the correct selection pool may render a job unnecessary and any resulting dismissals legally unfair.

Seeking Volunteers

After careful planning, employers may offer voluntary redundancy packages to employees. Encouraging volunteers for redundancy can help avoid compulsory redundancies and minimize the negative impact on employees. Employees considering voluntary redundancy should weigh the offered package and their future prospects before making a decision.

Consulting Employees

Employers are obligated to consult with individual employees facing redundancy and provide them with reasonable advance notice. Although there is no statutory minimum timescale for consultations involving fewer than 20 employees, it is essential that the consultation process be meaningful.

Employees have the right to be accompanied by a trade union representative or colleague during individual consultation meetings.

For redundancies affecting 20 or more employees at a single establishment, collective consultations with recognized trade unions or elected representatives must commence within specific timeframes.

These timeframes are at least 30 days before the notification of redundancies for dismissals of 20-99 employees and at least 45 days before the notification of redundancies for dismissals of 100 or more employees. Collective consultations should be completed before issuing dismissal notices.

In cases where there are no recognized trade unions or employee representatives, the employer must facilitate an election among employees to appoint representatives for the consultation process. The law requires that these consultations be meaningful and cover various aspects, such as the proposed selection process and scoring system.

Failure to engage in collective consultations may result in unfair dismissal and the payment of extra compensation, known as a protective award, which amounts to 90 days’ pay per employee.

Selection for Redundancy

Once the consultation process concludes, employers may need to select individuals for redundancy if there are not enough volunteers. The selection should be based on objective criteria, such as length of service (as one of several criteria), attendance records, disciplinary records, skills, competencies, qualifications, work experience, and performance records.

While the “last in, first out” (LIFO) method may seem appealing, it carries the risk of potential age discrimination claims, as younger employees are often affected.

Employment tribunals generally favour selection procedures based on a points system that objectively scores employees against relevant criteria. Employers must exercise caution in choosing and applying selection criteria to prevent discrimination.

For example, if a high proportion of women are affected due to the selection of part-time employees, it could be deemed discriminatory. It is advisable to involve at least two managers who are familiar with all employees in the selection pool to independently carry out the scoring process.

Suitable Alternative Employment

Employers have a duty to consider offering suitable alternative work to employees facing redundancy. If suitable alternative work is unreasonably refused by employees, they may lose their entitlement to a minimum statutory redundancy payment amount.

Employees have the right to a four-week trial period in a new role. If, during this period, both the employer and employee agree that the new role is unsuitable, the employee reverts to being made redundant.

The law requires employers to grant employees with at least two years’ service paid time off to search for new employment during the employer obliged final notice period.

Dismissal and Appeals

Once the individual consultation process is complete, the employer must decide whether to make the employee redundant and provide a written redundancy notice.

The statutory redundancy pay notice period should comply with the statutory minimum notice or the contractual notice, whichever is longer. The redundancy notice should also include an explanation of how the redundancy payment is calculated.

Employees should have the statutory right to appeal against the redundancy decision, allowing them to present their case and challenge the outcome.

Protecting People’s Health and Wellbeing

During the redundancy process, it is crucial to approach it with compassion, treating all individuals involved with dignity, respect, and kindness. The impact of redundancy on an individual’s mental health can be significant, and immediate and ongoing support should be readily available.

Employers should consider providing access to counselling services and other forms of support through an employee assistance program (EAP), if available. Some EAPs extend support to redundant employees for up to three months after their employment has ceased.

Making employees aware of these resources and how to access them can make a considerable difference in their overall well-being.

Additionally, offering outplacement advice to departing employees can help maintain their morale and facilitate their transition to new employment.

Practical support, such as helping individuals refine their interview skills, update their CVs, utilize social media platforms for job-seeking, and submit effective job applications, can be invaluable during this challenging period.

Survivor Support

Redundancies not only impact the individuals directly affected but also have an unsettling effect on the remaining employees who may fear for their own job security.

It is crucial to communicate openly and honestly with all staff, providing a thorough explanation of the situation and the need for organizational changes. Handling redundancies responsibly, fairly, and effectively is vital.

Emphasize a forward-looking, positive attitude, and demonstrate the value of each employee’s role in the organization’s future. It is essential for managers to possess or develop the necessary personal skills and attitudes to navigate through periods of significant change and provide support to the survivors.

Conclusion

Redundancy is a complex process that organizations may need to undertake due to various reasons, such as downsizing, closure, or a shift in required work. Planning and implementing redundancy procedures in a structured and legally compliant manner is essential to ensure fairness, transparency, and compliance with relevant employment laws.

By considering alternative approaches, engaging in meaningful consultations, following objective selection criteria, offering suitable alternative employment, and providing support to affected individuals, organizations can mitigate the negative impact of redundancy and protect the well-being of their employees.

FAQs

What is redundancy?

Redundancy refers to a situation where an employee loses their job because there is either less work available or their job position no longer exists or a particular department is no longer required by the company.

What is the purpose of a redundancy procedure?

The purpose of a redundancy procedure is to ensure that the process is fair, transparent, and legally compliant. It involves various stages, such as planning, identifying the pool for selection, consulting employees, selecting individuals for redundancy, offering suitable alternative employment, and providing support and counselling.

Can employers avoid redundancies?

Employers should explore alternative approaches to making redundancies less, such as recruitment freezes, reducing overtime, retraining or redeployment, pay freezes or short-time working. However, these alternatives may not always be feasible without breaching employment contracts.

What is the role of collective consultation in redundancy situations?

Collective consultation is required when 20 or more employees are at risk of redundancy at a single establishment. It involves consultations with recognized trade unions or elected representatives to discuss the proposed redundancies and other related matters.

How should employers select employees for redundancy?

Employers should use objective criteria, such as length of service, attendance records, skills, qualifications, and performance records, to select employees for redundancy. Using a points system that scores employees against relevant criteria is recommended to avoid discrimination.