Employers - minimum requirements
It is an unfortunate by-product of the Covid scenario that, despite the Governments furlough and job support schemes, redundancies have become more prevalent. But it is not just out of necessity that redundancies are being contemplated. In some cases the current environment is being seen as an opportunity to make savings by way of a restructuring. It is commonly believed that an organisation has to be in difficulties before redundancies can be made. This is not so. A business can be healthy and thriving but still proceed with a redundancy programme due to a myriad of reasons – most commonly, costs and efficiency savings. Other reasons could be a change in direction of the business, or the closure/ scaling down of one particular part of the enterprise.
With that in mind, below is a summary of the redundancy process:
A redundancy situation can arise where
- The workplace is closing or moving, or the business is ceasing trading altogether.
- The business has a reduced need for employees to carry out a particular kind of work.
If any of the potential scenarios set out above apply, you should begin the selection process by identifying the group of employees at risk of redundancy. This is known as the "redundancy selection pool". It is useful at this stage to take a step back and think carefully about which roles are at risk and how many employees carry out these roles. Those employers that skip this step and go straight to informing certain individuals that they are at risk of redundancy could put themselves at risk of an Employment Tribunal claim on the grounds of unfair dismissal. It is not an overstatement to say that where redundancy is concerned, process is everything.
You will then need to apply suitable selection criteria to decide which of the employees in the pool will be retained and which will be provisionally selected for redundancy. The selection criteria should be objective, rather than subjective, otherwise any redundancies that follow are likely to be unfair. Objective selection criteria may include:
- Length of service.
- Skills, qualifications and training.
- Attendance record.
- Disciplinary record.
You can consider attaching different weighting to each criteria, reflecting their relative importance, provided that you can justify such weighting as fair. For example, utilising weighted marking in relation to a particular skill or piece of knowledge required for the company’s current and future needs.
After you have identified the redundancy selection pool you should begin a period of consultation with those employees in the pool before reaching a final decision on whether it needs to make any redundancies. This will usually mean holding 3-4 meetings with the relevant employees to discuss the situation in more detail. You should use the meetings as an opportunity to:
- Discuss the basis for their selection, in terms of the selection pool, selection criteria and the way in which they were scored.
- Allow the employees to put forward any suggestions to you of ways to avoid their redundancy.
- Consider any alternative employment positions that may exist.
- Address any other matters or concerns the employees may have.
If you are considering making 20 or more employees redundant within a 90-day period, you will have a duty to undertake "collective consultation".
Your employees may be entitled to certain payments if they are made redundant, depending on how long they have been employed and the terms of their employment contract:
- Statutory redundancy pay. Those employed for two years or more will be entitled to a statutory redundancy payment calculated using age, length of service and weekly pay, subject to an upper limit.
- Notice pay. The amount of notice will depend on the terms of the employment contract, and is subject to a statutory minimum which depends on length of service - broadly one week per year of service up to 12 years.
- Pay in lieu of accrued but untaken holiday. They will be entitled to a payment in lieu of accrued but untaken holiday entitlement. The employment contract may provide that your employees must take any unused accrued holiday during their notice period. Alternatively, you may give notice ordering them to take holiday on specified dates, but such notice must be at least twice the length of the period of leave that they are being ordered to take (e.g. if you require them to take two weeks' leave, you must give at least four weeks' notice).
It is important that you follow a fair procedure in selecting employees for redundancy as a failure to do so could leave the company vulnerable to an unfair dismissal claim by a disgruntled employee. As mentioned above, following the correct procedures is crucial in redundancy situations. Do not give any scope to have the decision making process and procedures followed to be picked apart and lead to litigation.
DC Employment Solicitors specialise in employment law for both employers and employees. If you require any assistance navigating a redundancy process, you can contact them on 02380011234 or through the link above.