Unfortunately, redundancy is all too common in the current financial climate. Redundancy can be a difficult time for both employees and employers.
A redundancy situation will arise where an employer has a reduced demand for employees to carry out work of a particular kind. Whilst more often than not redundancy will occur where there has been a downturn in business, it can cover other situations, for example where technological developments mean that fewer employees are required to perform a particular task. Redundancy situations usually fall into one of 3 categories:
In each of these situations, the procedure adopted by the employer will be key in establishing whether any employment law rights have been infringed. Where redundancies are contemplated, the employer must consult with those employees who are potentially affected by the reduced demand. On every occasion, this will involve individual consultation. However, where 20 or more employees are at risk of being made redundant, the employer will have certain collective consultation duties, requiring them to engage in meaningful discussion with any recognised trade union or elected staff representatives. In situations where an employer is not required to dismiss all employees who carry out work of a particular kind, they will need to ensure that they have a fair selection process in place to identify which employees are to be made redundant. This will involve:
In going through a selection process, the employer also has to ensure that it does not place an emphasis on any criteria that are discriminatory. The most obvious example of this would be the traditional selection method of “last in, first out”: this would now give rise to a potential complaint of age discrimination. In all cases of redundancy, the employer will also be under a duty to consider redeployment as an alternative to dismissing an employee, where there are alternative vacancies available.
It is important to remember that termination of employment by reason of redundancy amounts to dismissal in law, so if and an unfair procedure is adopted, then an employee would have the right to bring an unfair dismissal claim before the employment tribunal.
Where an employee is being made redundant they will be entitled to receive notice of termination, a payment in lieu of any accrued but untaken annual leave and, if they satisfy certain requirements, a statutory redundancy payment.
A statutory redundancy payment would be due where:
Redundancy can often be complex and ensuring a correct procedure has been followed will be essential. If you are an employer or an employee who is facing a potential redundancy situation, contact us today.