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Redundancy Guide For Employers

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To make someone redundant the employer must demonstrate that the employee’s job will no longer exist. Redundancy is when an employer dismisses an employee for the following reasons:

  • The business which the employee is employed for is no longer carried out
  • The place where the employee is employed is no longer in business
  • The employer no longer requires the employee to perform work of a particular nature

Alternatives to redundancy

If you are considering making an employee redundant there are some alternatives which may suit you and your business better. If an employee’s contract permits you might be able to lay off an employee – which means you ask them to take unpaid leave. This can be a good solution if the lack of work is temporary.

Another alternative to redundancy is to offer short-time working to an employee. This is when an employee has no paid hours for a number of working days during the week because they are either working a reduced number of paid hours or their pay is less than half a week’s pay.

Non-compulsory redundancy

There are two types of redundancies: compulsory and non-compulsory. Non-compulsory redundancies cover voluntary redundancies and early retirement.

Voluntary redundancy – When you ask employees if they would like to be made redundant and then select employees to be made redundant.

You must not choose employees based on personal reasons or factors like race and sex. The process for selecting employees must be transparent and fair and employees that volunteer may not be selected.

Early retirement – This alternative to voluntary redundancy is when you offer employees an incentive to retire prematurely. You must offer early retirement to all your employees without singling out specific employees.

Remember that early retirement is the employee’s choice and you can’t force anyone into early retirement.

Compulsory redundancy

One of the most important things to consider when faced with making compulsory redundancies is to carry out a fair selection process. Fair reasons for selecting an employee to make redundant include:

  • Skills and qualifications
  • Job performance and work standards
  • Attendance
  • Disciplinary record
  • Length of service – it is wise not to solely rely on this method of selection as it can often result in age discrimination

The most prominent reasons for unfair selection of an employee for redundancy include: Involvements with trade unions, reasons relating to pregnancy or maternity leave, pay and working hours and discrimination based on factors such as age, sexual orientation or religion.

Redundancy consultations

Redundancy consultations are an absolutely essential part of the redundancy process. Without carrying out a redundancy consultation any redundancy you make will most likely be deemed unfair and could result in an employment tribunal.

A redundancy consultation will not always end in an agreement, and does not have to end in agreement but it must be held with a view to reaching an agreement. During the redundancy consultation you must discuss ways of avoiding or reducing the redundancy.

At the end of any redundancy consultation you must give the employee correct notice and agree a leaving date.

If you are making 20 or more employees redundant within a period of 90 days the procedure is slightly different and you are expected to follow collective consultation guidelines.

Redundancy notice

The statutory notice period is the minimum amount of notice you are allowed to give an employee. The statutory notice period for redundancies is as follows:

  • Employees in service for 1 month – 2 years: 1 week notice is the minimum
  • Employees in service for 2 years – 12 years: 1 weeks’ notice for every year employed
  • Employees in service for 12 years or more: you must give at least 12 weeks’ notice

Redundancy pay

Employees that you make redundant may be entitled to ‘statutory redundancy payment’ if they meet the following criteria:

  • They are working under a contract of employment
  • The employee has at least 2 years’ of continuous service
  • The employee has been dismissed, laid off or been subject to short-time working

Employees that opted for early retirement do not qualify for ‘statutory redundancy payment’.

Get a professional opinion to avoid an employment tribunal

There are so many variables to consider when making redundancies that it is always advised to seek specialist legal advice, especially if you are concerned about making redundancy pay. To get a second opinion and free advice from a legal expert about making redundancies contact us today on 0161 115 6164.

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