Redundancy Advice for Employers

If you are having to consider making redundancies you need to ensure that there is a correct redundancy situation. This is either:

  • Closure of the business in which the employee is employed;
  • Closure of the workplace at which the employee is employed; or
  • The company has a reduced requirement for employees to carry out work of a particular kind.

Minimise unfair dismissal claims

Although redundancy is a potentially fair reason for dismissal, an employer will need to show that they have acted reasonably in dismissing the employee. An employee who has at least one year’s continuous employment could bring a claim for unfair dismissal if the redundancy procedures are followed incorrectly. For step-by-step guidance contact us today. Our skilled employment law specialist solicitors can ensure you follow a fair procedure when making redundancies.

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Further information on Redundancy

Redundancy Payments

Employees who are dismissed by reason of redundancy are entitled to a statutory redundancy payment if they have at least two years’ continuous employment. If the company does not make the payment, for example, because it is insolvent, the employee may apply to the Secretary of State for payment out of the National Insurance Fund. Statutory redundancy pay is calculated according to a formula based on age, length of service and pay. The maximum number of years that may be taken into account to calculate a redundancy payment is 20 years. A week’s pay is capped at the statutory maximum, which is increased in February each year and is currently £479 (accurate as of 12/05/16).

In addition to a statutory redundancy payment, an employee may also be entitled to an enhanced redundancy payment. This may be expressly provided for in the employee’s contract or implied by custom and practice if the company has a practice of providing enhanced redundancy terms to its’ employees.

Alternatives: pay cuts, lay-off and short-time working

At the outset of a fair redundancy procedure, an employer will need to consider whether it can avoid making compulsory redundancies. This is likely to involve restricting recruitment, reduction or removal of overtime opportunities and not renewing the contracts of contractors and workers supplied by agencies. If these initial steps are not appropriate or insufficient, an employer may be able to reduce employees’ pay (with their freely given consent) lay off employees or put them on short-time working. An employer should also consider requesting volunteers for redundancy or inviting employees to consider early retirement. Before taking any of these measures please ensure that you contact us and obtain specialist Employment Law advice.

Making 20 or more employees redundant?

If you may need to make 20 or more employees redundant over a period of 90 days or less, an employer has a duty to:

  • Inform and consult appropriate employee representatives.
  • Notify the Secretary of State

A tribunal may award up to 90 days’ pay in respect of each employee where there has been a failure to inform and consult. Whenever there is an obligation to consult collectively, the employer will also need to ensure that it has followed a fair procedure in relation to individuals, including consulting with them properly, so as to minimise claims for unfair dismissal.