Your Business Matters

Redundancy

We’ve all heard a great deal of job losses and redundancy in the news due to the recession and continuing economic slowdown.  It may be an issue that faces your business and if so it is worth looking at the fundamental aspects.

What Is Redundancy?

Redundancy is a potentially fair reason to dismiss an employee. The fact that a redundancy situation is present will not make dismissal fair. Your business must follow a fair procedure and act “reasonably” in the dismissal process. The length and complexity of the procedure will depend upon the number of employees your business is proposing as redundant.

 

  • Theresa Carling
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  • Joan Casson
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The guidelines set out below are intended to highlight some of the pitfalls a business may fall into. Following these guidelines will not in itself make dismissal fair. Redundancy processes are inherently complex and there is no replacement for taking advice on a case by case basis.

Generally a redundancy will arise when:-

Your business ceases to carry out either

  • business for the purposes for which the employee was employed
  • business in the place where the employee was employed

Where the requirements for either:-

  • employees to carry out work a particular kind
  • or work for the particular kind in the place where the employee was employed has ceased or diminished

Put simply a redundancy situation may arise where the employee’s work has disappeared or diminished.

The Redundancy Procedure

The length and complexity of the redundancy exercise will depend upon the amount of employees which your business is proposing to dismiss.

Number Of Employees

  • If your business is proposing to dismiss 20 or more employees it will need to consult with employee representatives and/or trade union representatives at least 30 days prior to the first dismissal taking effect
  • If your business is proposing to dismiss 100 or more employees it will need to consult with employee representatives and/or trade union representatives at least 90 days prior to the first dismissal taking effect

In both the above scenarios:-

  • There are strict criteria covering the consultation process
  • There is a duty upon your business to notify the Secretary of State of the business’ proposals

You will also be required to consult with the individual employees selected for redundancy and follow a fair procedure, including the statutory dismissal and disciplinary procedures.

If your company is proposing to dismiss less than 20 employees, the general rules of procedural fairness will apply. This will still mean conducting a consultation exercise and following the statutory minimum dismissal and disciplinary procedures.

Consultation

Consultation exercises can be fairly onerous on businesses and fairly complex in nature particularly if there are more than 20 dismissals proposed. Great care should, therefore, be taken to plan the redundancy exercise properly, for example planning the election of employee representatives and ensuring that the election is fair.

Pools For Selection

Where a number of employees are to be dismissed by reason of redundancy from a particular category of employee your business should pay careful attention to the “pool of employees” from which employees are selected. For example if your business has a sales team who is assigned to specific areas of the country and demand is reduced in one geographical area, your business should consider whether it would be appropriate to select employees from the entire sales force or just the team assigned to that particular area.

Miscellaneous

Once your business has selected employees for potential redundancy it has a duty to consider whether there is any suitable alternative employment.

If your business dismisses an employee there is still an obligation to pay that employee a redundancy payment.

Your business should be mindful that it must apply the minimum statutory dismissal and disciplinary procedures prior to deciding on any dismissal.