Making staff redundant usually means the dismissal of an employee when you no longer need them to do their job. This might be because your business is changing how it works, doing things in a different way, changing location or closing down.
For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist and redundancies should be carried out fairly, adhering to the correct process throughout consultation periods. Making staff redundant can be compulsory or non-compulsory and to be genuine, you must demonstrate that the employee’s job role will no longer exist.
Before dismissing staff you should take steps to avoid redundancy and you must try and find suitable alternative work within the organisation.
If you do decide redundancies are necessary, you should check if you have a redundancy policy as well as any collective agreement with a trade union. You must then follow a fair redundancy process that will include consulting your employees. You will need to have an appeals process for employees to follow if they feel the redundancy process or their selection was unfair and they decide to challenge a decision under the right to appeal.
The process when making staff redundant
Firstly, you should make a redundancy plan that you share with all of your staff. This will help you follow a fair process and avoid the risk of any legal claims.
Your redundancy plan should include all the options you’ve considered before deciding on making redundancies and the number of redundancies you’re considering. It is important to keep your employees informed throughout the process, so good, clear communication is key.
You will need to consult all employees that are affected, including any on maternity leave or absent due to sickness and give details of the timeframes involved.
Redundancy selection criteria
There may be several staff that perform a similar type of role within the area of business that needs restructuring and so you will need to include these employees within a ‘selection pool’ of people who are at risk of being made redundant. In some circumstances, the selection pool may just include one employee. You must be clear on your reasoning for selecting the pool, which should be based around a fair selection criterion, as these criteria are likely to be discussed and possibly challenged during the consultation period.
The redundancy selection criteria are used to score employees to determine who will be made redundant; most businesses score employees based on their level of transferable skills and knowledge, attendance, and performance. It is discriminatory to score based on any protected characteristic such as sex, race, pregnancy or maternity, or age, as well as employees who work part-time or who are working on fixed-term contracts.
Employees need to be informed that their role is at risk of redundancy as soon as possible to help them understand the reasons for your decision. You can do this in a group meeting with your selection pool, or one-to-one if the pool is smaller.
Consultation periods when making staff redundant
Employers are required to start consultation as soon as possible after making the business decision to make staff redundant. During your first meeting you should make it clear that this is the start of the redundancy consultation process. Consultation should be open and honest conversations with the affected employees about the redundancy process and explain the business reason for the proposed redundancies, the number of redundancies and area of the business affected, the selection criteria and how redundancy pay will be calculated.
The redundancy consultation should be a discussion where you ask for your employees ideas on ways to avoid or reduce the redundancies, how to reduce the effect of the redundancies, how employees are selected for redundancy and how the organisation can restructure or plan for the future. You do not have to agree to employees suggestions but you must consider them to avoid an employee claim that the redundancy process has been unfair. It’s important to document all discussions and the reasons for your decisions.
After this initial meeting, the first formal consultation should then explain how individuals have scored and give them an opportunity to give their feedback. Employees have the right to be accompanied and challenge the business reasoning and suggest alternative options. You must ensure that all alternatives have been explored.
Employers need to consider what roles may be available in different areas of the business that employees may be suitable for and employees have the right to try out an alternative role within the organisation for 4 weeks, or more if agreed in writing, without giving up their right to redundancy pay. You will need to make a judgment based on how similar the role is to an employee’s current position and the level of skills needed in a new role.
Notice of redundancy
Following consultation, a final meeting with redundant employees is when an employer should issue a notice of redundancy, adhering to notice periods defined within employment contracts; giving written notice confirming that their post has been selected and outlining their redundancy terms. Employees that you make redundant will have certain rights and may be entitled to redundancy pay.
Employees with at least 2 years’ service are entitled to statutory redundancy payment. The law sets a minimum payment. You also need to give any employee you make redundant reasonable time off to look for a new job or to arrange training.
If you need help with any of the redundancy process or an independent HR professional to support you during the process or as a result of an unfair dismissal claim then please get in touch.
