In this, the third in our series of articles on Redundancy, we deep dive into the processes and procedures that employers must engage in order to successfully navigate the murky waters of redundancy.

What is defined as a Redundancy?

The definition of redundancy is set out in s. 139 of the Employment Rights Act 1996, as a dismissal that is wholly or mainly attributable to the fact that:

1. The employer has ceased or intends to cease carrying on the business either generally or specifically in the place where the employee is employed
2. The requirement of the business for employees to carry out work of a particular kind has ceased or decreased or is expected to cease or decrease.

 The above definition is applicable with respect to statutory redundancy pay (as opposed to a voluntary redundancy process where flexibilities abound) and is used to assess whether there is a proper and potentially fair reason for dismissal. It envisages and facilitates three main redundancy situations:

• The closure of the business as a whole.
• The closure of the business at a particular workplace or site.
• A diminishing requirement for employees to perform work of a particular kind.

So, what are the employer’s obligations?

The starting point must be to confer with the contract employment because some contracts of employment offer redundancy packages (also known as ‘golden goodbyes’) which go over and above the statutory redundancy payment obligations of an employer.

Notwithstanding the above, If an employer elects to dismiss an employee by reason of redundancy, he/she has a number of statutory obligations as a prerequisite.

Failure to comply with the process may render an employer liable in a claim of unfair dismissal.

What is involved in the Redundancy process?

There are five stages to the redundancy process that the employer must execute and demonstrate that is has been followed through, and they are set out below:

1. The employer must demonstrate a strong business case for redundancies.
2. The employer must consider alternative options – and actively seek to have due regard for them.
3. The employer must fairly and carefully select the pool of employees for redundancy.
4. The employer must hold a consultation with the affected members of staff and ought to have due regard to the discussions that arise during this consultation process.
5. The employer must finalise the process and be clear on what is the final outcome from the consultation process.

Most importantly and specifically, the employer must be able to demonstrate solid reasons for making redundancies. Some common reasons for making an employee redundant are, amongst others, if the business is moving address, and business requirements leading to cost- cutting.

However, the employer must take into consideration that it is illegal to select employees to be made redundant, due to a protected characteristic. The Equality Act 2020 sets out the relevant protected characteristics:

• Age
• Disability
• Gender reassignment
• Marriage and civil partnership
• Pregnancy and maternity
• Race
• Religion or belief
• Sex
• Sexual orientation

Furthermore, regarding considering alternative options before making members of staff redundant see our previous article on this topic.

It is essential that the employer carefully selects the employees who are to be made redundant. The employer should first provide the employee with an advanced warning, which should be confirmed in writing. If there is more than one employee to be made redundant, then the employer should create a selection pool and apply objective criteria to analyse staff performance, as well as the importance of their role, skill levels etc.

Additionally, the employer must consult with staff which should outline and take into account the staff feedback on the alternative measures that could prevent dismissal (even if it is the case that there are no suitable alternatives for the at risk staff- this should be fully mooted too and accurate notes taken that reflect the discussions had).  The employer should explain to the at-risk staff the criteria employed in order to select the pool of at-risk employee(s) to be dismissed and why this criteria has been used.

The employer must allow the employee reasonable time off work to look for alternative employment. If the proposed dismissal is of 20 or more employees at one establishment within 90 days, the employer must consult ‘appropriate representatives’ of the employees concerned, pursuant to Trade Union and Labour Relations (Consolidation) Act (TULRCA 1992).

Finally, once the employer has completed the selection process, the employer should provide each affected member of staff with notice. The affected employees have the right to appeal the employer’s decision and their employer should inform them of that right.

The employer must also inform the employee of key information such as the details of notice pay, and statutory redundancy pay. The employer should speak to each affected employee and advise them of the decision and must confirm their decision in writing. This notice letter should include details of the redundancy pay the employee will receive.

What is the payment for statutory redundancy?

Redundancy pay is available if the employee has had two years of continuous employment with their employer. The amount payable is:

• Half a week of pay for each full year if the employee was under 22.
• One week of pay for each full year if they were between 22 and 41.
• One and a half week of pay for each full year, if they are 41 or older.

Redundancy is a complex process which is a not welcomed but crucial part of business life. Dismissing employees can be a particularly stressful and time-consuming process for the employer and doing so without following the correct legal procedure could lead to penalties. Thorough consultation with the employees at risk and continuing to look for alternative options to redundancy throughout, are crucial steps to getting things right. Please engage an Employment Law specialist to assist you with this process if you are unsure of how to go about executing the process. The cost of engaging the services of an Employment Law specialist is often more cost-effective than having to defend an Employment Tribunal Claim or having to settle a brewing battle on a without prejudice basis. Litigation can be like swimming with sharks…

At Hillary Cooper Law we can provide you with draft documents which are legally compliant with the Statutory Redundancy procedures or we can work on a bespoke basis with an employer based on a budget that is suitable for the business.