The redundancy process: everything you need to know as an employer or employee
Many businesses, large and small, are feeling the financial strain from the lockdown due to the outbreak of Covid-19. The government’s furlough scheme was put in place to help businesses to pay their staff during these uncertain times but many firms are still facing hardship. With more and more shops opening, staff on furlough may be required to come back to work without their employer being able to recoup those wages through the furlough scheme. It is here that serious decisions may have to be taken in terms of making staff members redundant.
Whether you are an employer making decisions about redundancies or if you are an employee who is facing the prospect of being made redundant, it is important to understand English employment laws to ensure the process is being handled correctly. The guidance below can help an employer understand the steps they have to take which, if not done correctly, may open the door for an employee to challenge their redundancy.
For a staff member to be made redundant, an employer will have to prove that their role will no longer exist. The main reasons that a role may no longer exist include:
- the company closing down the business as a whole or closes down a workplace run by the company,
- the work carried out in the role has ended or been severely reduced,
- changing the way the business is run whether it is through the buying of new machinery or changing the nature of the business entirely.
With companies trying to stay afloat, they may require fewer employees to do more work so a new role may encompass and replace an old role, making the old role redundant.
Where possible, you should attempt to avoid making redundancies in favour of some alternative solutions. One alternative is to try and find a new role for the member of staff within the company if you can afford to keep them. You can also lay-off an employee as a temporary measure if you can’t afford to give them paid work or reduce their working hours. This can only be enforced if it is covered in an employee’s contract which may also cover agreements made in the industry as a whole or between any trade unions which may be involved.
If redundancy is your only feasible option, you must be open and transparent with your staff through a redundancy consultation which may be required on an individual basis, or to the entire workforce. If you are proposing more than twenty redundancies, a collective consultation must take place. This will include holding conversations with staff representatives as well as consulting with trade unions. You must explain why the redundancy is necessary and inform staff if there are any alternatives (as mentioned above) for them in the company and give them a chance to consider their options.
From here, affected staff must be given a leaving date. Once the consultation has ended, redundancy notices can be issued. For staff members who have been employed for up to two years, a minimum of weeks’ notice must be given, although if their contract allows for a longer notice period you must provide them with at least their contractual amount of notice. Staff members who have been employed for more than two years must be given a minimum of one weeks’ notice for every full year of employment that they have worked up to twelve years, again any longer period of notice provided for in their contractual terms must be given. Staff who have been employed over twelve years must be given a minimum of twelve weeks’ notice. You will have to pay your staff during the notice period even if you end your staff’s employment with no notice (which may be covered under the employment contract).
You may decide to offer staff the chance to take voluntary redundancy or give them incentives for early retirement to save other staff members from losing their jobs before holding consultations with those who you plan to make redundant.
Compulsory redundancy means that an employee is given no choice on the matter. In this case, the employer will have to clearly identify who is being made redundant and why to ensure fairness; that the employee is not being discriminated against. Fair reasons to be select one employee over another for redundancy includes comparing skills and qualifications, work ethic, attendance and disciplinary records. Unfair reasons would include factors that would be considered discriminatory based on one of a number of protected characteristics and which are similar to unfair factors which are not allowed when considering the hiring of staff in the first place. This includes choosing those on maternity leave or those working part-time as well as the common issues of race, gender and age among others.
Some individuals may be eligible for statutory redundancy pay as long as they have worked for at least two continuous years of service and under an employment contract. Employees must be informed, in writing, of the redundancy pay they are to receive and how it has been calculated; this is based on the employee’s age and length of service.
It is important as an employer to ensure you are covered against challenges to redundancies and while it is never nice to be made redundant, as an employee you will want to ensure that your employer acted fairly against you and gave you all the information, time and alternatives that was required.
If you would like advice on redundancy whether you are an employer about to undergo the process steps or if you think you have a right to challenge it as an employee, please contact Matthew Jenkins at firstname.lastname@example.org
“The information contained in this article is for general interest purposes only. We believe the information contained in this article to be correct at the time of publication. It is important to seek professional advice on any specific issues as the application, interpretation and impact of laws can vary widely based on the specific facts involved. Accordingly, the information on this site is provided with the understanding that Streeter Marshall, the authors or publishers are not herein engaged in rendering legal advice and accept no responsibility for loss occasioned by any person acting or refraining from acting as a result of the material contained herein.”