Businesses regularly evolve and shift focus and on occasion it becomes necessary to move premises and/or lose staff.
Redundancy occurs where:
- It becomes necessary to cease business in the area in which the employee was employed (Job Redundancy); or
- It becomes necessary to cease to carry on that business in the place where the employee was employed to work (Workplace Redundancy); or
- The requirements of the business are such that you no longer require as many employees to carry out work of a particular kind i.e. you have a surplus of employees carrying out the same work (Employee Redundancy).
In most circumstances, you must undertake a period of warning, information giving and consultation with any employees who may be affected by redundancy. If you fail to consult at all or insufficiently, you open yourself up to a Protective Award from an employment tribunal (up to 90 days pay for each disgruntled employee).
If you are in a "surplus employee" type situation, you must apply appropriate and fair objective selection criteria to choose which of those employees should be made redundant. Employers need to use a skills based matrix to objectively select employees to go. In all circumstances, you must consider any "redundant" employees for suitable alternative employment within your company. What is suitable? What happens if the employee refuses to accept such a position? Are you entitled to withhold any redundancy payment due to them? Did you know that employees are entitled to try the new position for a trial period?
If an employee is currently pregnant or on maternity leave, then the issues become immediately more complex and you may be liable for Sex Discrimination, in addition to potential automatically Unfair Dismissal claims, if you make a redundancy or fail to give them first preference of any alternative employment. Depending on how many employees you are considering to make redundant, there may be a statutory period of time over which consultation must take place. If you are making 20 or more employees redundant, you must notify the Secretary of State for BERR.
The process can appear daunting, but if approached properly and ahead of time in order to allow consultation to take place, redundancy can be a fair reason to dismiss employees. Let stevensdrake guide you through the steps that you need to take; draft letters for you; calculate redundancy entitlements for staff and ensure that you select employees to go fairly and objectively to limit the possibility of further claims.
