What is Redundancy?
It is the role which is redundant and nothing personal about the employee(s).
Can we ask for volunteers?
Yes, but think carefully - you might avoid a selection process but the ‘wrong’ employees might volunteer. You can refuse an application for voluntary redundancy but it can create resentment.
How do I select STAFF for redundancy?
Redundant staff must be selected fairly. For each redundancy consider how the person has been selected. Are they the only person in that role? If so, they are in a selection pool of one? If several people are doing the same role but you only want to reduce some, they will ALL need to go into the selection pool. Defining the pool and whose roles it should contain can be complex so taking legal advice here can be crucial.
You must have an objective assessment to create the criteria. To show a fair process you typically need to demonstrate that:
- the selection criteria was objective (create a scoring system for your criteria)
- the affected staff were warned they were at risk of redundancy and the reasons explained
- employees were afforded an opportunity to consider and comment on the proposal.
What is an ‘objective process’?
You must consider who will be most valuable to the business - without favouritism. Length of service may be considered in a tie-break situation, but only in the case where skills and performance are equal.
You can take into account performance and attendance, but the emphasis has to be on objectivity. Better criteria might include disciplinary records, qualifications, and experience. Of course, these may not provide the best match for your future needs. Often the less ‘measurable’ things like potential or attitude are required. Evidence with examples of the employee’s behaviour will be required to support your assessment.
The bottom line is to consider whether the criteria could be used in a discriminatory way.
What process do I need to follow?
Where you’re making 20 or more roles redundant in a 90 day period, you’re required to enter into collective consultation with either a recognised trade union (s) or with elected employee representatives.
For 20 or fewer redundancies in a 90 day period you are only obliged to consult with your employees individually. An individual consultation process typically requires three meetings, with each individual, over a seven to ten day period.
It is at the final meeting that the redundancy dismissal is confirmed and an individual’s notice period will start. The notice period in their contract may have been overridden by the statutory minimum if they have long service.
What costs DO we need to consider?
Employees with at least two years continuous service at the time of the redundancy dismissal (the end of their notice period if they are serving out their notice) are entitled to statutory redundancy. This figure depends on their age and their length of service (www.gov.uk/redundancy-your-rights/redundancy-pay)
Payment in Lieu of Notice - in some cases you may want to offer the employee a cash payment without the requirement to work their notice.
Holiday - employees will need paying for any unused holiday entitlement for the current year or deducted if not accrued.
The costs of getting it wrong
Failure to follow a fair redundancy process could result in an employee making a claim in the Employment Tribunal. If your process is found to be discriminatory in some way the financial consequences can be substantial. That is because there is no cap to the limit of compensation in a discrimination claim.
Menzies Law offers a ‘Guide to Redundancy’.