Redundancy Law

Redundancy laws are intended to provide a fair and just framework through which this difficult, regrettable but sometimes unavoidable process can be carried out.

One of the most important aspects of redundancy law is the provision of a statutory redundancy payment, which seeks to compensate your employees for their dismissal with a tax-free sum that proportionately reflects the length of service they have given to your company, provided they have been working with you for more than two years.

Although often used by many people as a synonym for any kind of dismissal, redundancy is actually a well-defined legal term that refers to a specific type of dismissal. Redundancy is when a person is dismissed because they are no longer needed by your company. Generally, this happens for one of three reasons:

  • Complete cessation of your business;
  • The shutting down of your employee’s place of work;
  • Reduction in the number of workers needed to do your employee’s job.

An employee may have an unfair dismissal claim if they have the requisite service requirements and can show that unreasonable criteria have been used to select the individual being made redundant. For the redundancy to be fair, you must have created an objective and justifiable set of criteria which are used to select the employee or employees to be made redundant (e.g. skills, qualifications, productivity, performance or disciplinary proceedings), and must then apply these criteria rigorously and without bias to all employees being considered for redundancy.

An employer is expected to follow a fair a reasonable consultation process so for example it would unlikely to be viewed as ‘fair or reasonable' if you select one employee for redundancy without applying a selection criteria.  If you can be shown to have selected an employee for redundancy using irrelevant or unjustifiable criteria (for example for reasons relating to age, sex, race or disability), then you would be regarded by an Employment Tribunal as not having carried out the selection process in a fair manner, and there is every likelihood that the redundancy would be classed as unfair dismissal, with all the inherent consequences this entails. You may also be faced with a discrimination claim.

A fair and reasonable redundancy process will also consider if there are any suitable alternative positions the employee could be considered for which will avoid the need for the redundancy all together.  Equally, if an employer identifies a suitable alternative position and the employee rejects this then he or she would not be eligible for a statutory redundancy payment. 

LARGE SCALE REDUNDANCIES & COLLECTIVE CONSULTATION

If an employer is making more than 20 redundancies within 3 months from one establishment (or office), then the employer must first consult collectively with their employees.  If collective redundancy consultation is triggered, then the consultation period before notice of redundancy is given, must last at least 30 days.  If an employer is making 99 redundancies or more then the consultation period increases to at least 45 days. 

In the collective consultation period trade union or employee representatives should be appointed to represent the employees to enable a collective, or group, consultation to take place about the proposed redundancies.  After an employer has completed the collective consultation it is then required to consult individually with employees about their redundancy. 

If an employer fails to collectively consult, then an employee can bring a claim in an Employment Tribunal.  If the employee is successful in such a claim the Tribunal can make a protective award to that employee of up to 90 days’ gross pay.

If you are unsure how to instigate a redundancy process, or you require further more detailed information about the law regulating redundancies, Ashby Cohen can help you to redress the balance. We specialise in employment law cases, and our years of experience as employment lawyers make us uniquely qualified to assist you with any redundancy issues you may have. Please contact us for an initial free telephone consultation.

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