Redundancy Advice for Employers
If you are having to consider making redundancies, you need to ensure that there is a genuine redundancy situation first. This is either:
- Closure or anticipated closure of your business;
- Closure or anticipated closure of a workplace; or
- Your business has a reduced requirement for employees to carry out work of a particular kind.
How can your business minimise unfair dismissal claims?
Redundancy is a potentially fair reason for dismissal. Notwithstanding this, you need to show that you have acted reasonably in dismissing your employees by following a fair process.
If the employees you intend to make redundant have at least two years’ service, they could succeed in a claim for unfair dismissal if you do not follow a fair process.
How we can help your business
For guidance on how to consult with your employees to ensure you follow a fair process, contact us today. Our skilled employment law specialist solicitors can ensure you follow a fair procedure. This will minimise the risk of your employees bringing a successful claim of unfair dismissal in an Employment Tribunal.
If an employee you intend to make redundant has less than two years’ service, you should still ensure you follow a fair process as your employee could bring a successful discrimination claim.
For further information call the numbers above or arrange a call back at a convenient time for you by completing our call back request form. We are here to help.
Further information on Redundancy
Any employee that you make redundant is entitled to a statutory redundancy payment if they have at least two years’ continuous service. If your company is unable to make the payment, for example, because your business is insolvent, your employee may apply to the Secretary of State for payment from 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 each year and is currently £544 (accurate as of November 2021).
In addition to a statutory redundancy payment, your employee may also be entitled to an enhanced redundancy payment. This may be expressly provided for in your employee’s contract, in a redundancy policy or implied by custom and practice if your company has a practice of providing enhanced redundancy terms.
Alternatives: pay cuts, lay-off and short-time working
At the outset of a fair redundancy procedure, you will need to consider whether you can avoid making compulsory redundancies. This is likely to involve restricting recruitment, reduction of overtime opportunities and not renewing the contracts of contractors and agency workers.
If these initial steps are not appropriate or insufficient, you should consider whether you could make use of the following to avoid making compulsory redundancies:
- reducing employees’ pay (with their freely given consent)
- laying off employees or putting them on short time working (if permitted by their contract of employment)
- asking for volunteers for redundancy
- inviting your 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 need to make 20 or more employees redundant over a period of 90 days or less at an establishment, you have 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 if you have failed to inform and consult with your employees for a period of at least 30 days. Whenever there is an obligation to consult collectively, you will also need to follow a fair procedure in relation to individual consultation. In addition to collective consultation you have an obligation to consult with your employees individually.