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Redundancy – what Employers need to know

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Redundancy is a potentially fair reason for dismissal. However the redundancy reasoning and the consultation procedure by which the redundancy is concluded, must still be fair and reasonable in all the circumstances.

According to the Office for National Statistics (ONS), the most recent UK labour market bulletin shows 91,000 people in the UK lost their jobs through redundancy from November 2018 to January 2019.

Redundancy occurs in 3 situations when an employee is dismissed due to:

  1. The actual or intended closure of the whole business;
  2. The actual or intended closure of the business at a particular workplace;
  3. A reduction in the need for employees to carry out work of a particular kind.

Going through a redundancy process can be stressful, and doing so without following the law and a fair procedure, could lead to expensive penalties!

As the employer, you must show that:

  • The employee/s concerned have been given as much advance warning as is reasonable and practicable that their post is at risk of redundancy, although there are no legal criteria for prior notice for 19 or less employees/roles being considered for redundancy;
  • The employee/s concerned have been consulted individually;
  • Where a single and specific role is to be considered for redundancy, such as IT Manager, Supervisor, credit controller etc, then there are clear grounds/reasoning for the selection of the role, or
  • Where one or more roles, are to be selected from amongst several of the same or similar roles, that the selection for redundancy is made against a set of fair and objective criteria, which has been used to ‘score’ all staff of those categories;
  • Suitable alternative employment has been offered if possible;
  • Voluntary redundancy has been offered wherever reasonable to do so and operationally feasible.

Most importantly, carefully plan the consultation process, so as to ensure transparency wherever possible and above all, to reassure all employees who are not affected by redundancy, that their roles and the company’s future is secure and that there are legitimate reasons for the changes.

A dismissal for redundancy may be unfair because:

  • There was no genuine redundancy situation;
  • The employer failed to consult properly (i.e. meaningfully);
  • The employee was unfairly selected;
  • The employer failed to consider and/or offer “reasonable” and suitable alternative employment.

Above all, remember two things:

  • Firstly, that from a legal perspective, it is the “role/job” that is made redundant, even though an employee currently occupies that specific role.
  • Secondly, communicating with employees throughout the whole process, is vital!

Allison Murray, HR Manager – PSM HR Outsourcing.

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