Employers Redundancy
A redundancy arises when an employee is dismissed because they are no longer required to undertake their role, for example, the job no longer exists.
Where do I start if a redundancy process is necessary?
You must ensure that there is a genuine reason for the redundancy and identify the appropriate pool of those potentially at risk. You will need to decide on an appropriate selection criteria and adhere to a fair and reasonable consultation process.
Can I ask for volunteers?
You can invite volunteers for redundancy but are not necessarily obliged to accept those that apply. It is possible to avoid the need to embark on a full redundancy consultation process if enough individuals volunteer and are accepted. Some employers consider offering a more enhanced package as an incentive for volunteers and if this happens, it might be appropriate to ask that they enter into a Settlement Agreement. This is a confidential document that will prevent them from pursuing their employment rights in return for a financial settlement. It is a requirement that they seek independent legal advice where they are issued with a Settlement Agreement and usual for you to make a contribution towards the legal fees, on the assumption that they enter into it.
What will the consultation process involve?
You should provide an overview of what to expect during the consultation process and plan it very carefully. Remember, the prospect of being made redundant can be daunting and communication is very important. The consultation should be fair and thorough, for example, consultation meetings and whether there any other suitable alternative positions available. Where more than 20 employees are at risk of redundancy, collective consultation obligations will be in place rather than on an individual basis.
What redundancy will I need to pay?
Employees with two or more years’ service will be entitled to a statutory redundancy payment. This is calculated by reference to their age, length of service (capped at 20 years) and gross weekly pay which is capped and reviewed annually. It could be that you operate a more generous policy with an enhanced redundancy payment. They should also be entitled to other contractual entitlements, for example, accrued untaken annual leave.
What if they are unhappy with the decision?
You should allow a right of appeal against the redundancy decision and, again, adhere to a reasonable procedure. Failure to conduct a fair and reasonable process could result in a claim of unfair dismissal in addition to any other relevant claim.