Let’s be clear. Employers can legally make employees redundant but by the same token employees do not have to accept that they are redundant just because their employer says that is the case.

Redundancy has always been relevant in the workplace, perhaps never more so than in the current economic climate. Whether we are still in recession, bumping along the bottom of the economic cycle or benefitting from green shoots of recovery unemployment continues to rise as employers seek to cut costs and make their organisations leaner and fitter for the future.

It is strange but the new ACAS Code of Disciplinary and Grievance Procedures for dismissal does not apply in redundancy. This does not mean that the employer cannot follow proper procedures, in particular, consultation with all employees who could be affected by redundancy. The employer cannot just pick a few people and get rid of them and call it redundancy! However, if matters are dealt with in a proper manner then the employer can legally make staff redundant.

As an example, a large manufacturing plant in the UK was closed where some 450 people were involved, as the work carried out at the factory was being transferred to other company premises, much of it going to Poland. Despite the number of people involved and the complex issues, with all departments and Unions working together and following appropriate procedures, the factory was closed over a period of time, the appropriate payments made to the employees, and no claim whatsoever made against the employer.

However, an employer cannot be blasé when dealing with redundancy; in the case where an employer made a number of people redundant and failed to acknowledge the rights of a female worker on maternity leave, this resulted in a number of claims, including unfair dismissal and sexual discrimination (there is no limit on the amount of the award for a successful discrimination claim) against the company. The company’s method of dealing with the matter meant that she was not properly made redundant or should not have been made redundant at all.

Here are some simple do’s and don’ts:

1. What is a redundancy dismissal or what can give rise to a redundancy dismissal?

The closure of the business in whole or in part.

The employee will no longer be required to do their job due to an economic downturn and/or business restructure.

The place of work was closed where an employee is employed by the employer.

A diminishing requirement for an employee to carry out work of a particular kind at the place where they are employed.

2. What needs to be done for redundancy?

A staff meeting with employees to introduce the employer’s intentions.
First individual consultation meetings with employees.
Seek volunteers for redundancy and for employees to put forward their suggestions to avoid redundancy.
A fair selection process, including what is called “pooling” of employees in that it is not the employee in person who is redundant but their job and consideration must be given to all employees who could be affected by redundancy to decide which one should be made redundant in any particular case, if at all. The selection process can often be dealt with by a proper scoring process.
Inform employees affected of their provisional selection for redundancy.
Second individual consultation meetings with employees.
Consideration of suitable alternative employment for affected employees.
Additional individual consultation meetings if required.
Written confirmation of the redundancy decision.
Give the employee a right of appeal against the employer’s decision to dismiss on the grounds of redundancy.

All these decisions and the process leading up to them should be properly considered and documented.

Consultation – you need to do it!

Consultation provides an opportunity for the employer and the employee affected by the redundancy situation to discuss the redundancy that the employee is faced with to obtain suggestions from the employee on possible ways to avoid the redundancy and to provide an opportunity to reduce uncertainty by the employee on the process and what they are faced with.

Collective redundancies – More than 20 employees facing redundancy – it’s a little different

An employer looking to make more than 20 employees redundant must still follow a fair and reasonable redundancy process and go through a collective consultation process. Employers in such situations are advised to seek advice on ensuring that the proper processes are followed.

The Most Common Mistakes in Redundancies

Not following the proper procedures. Other mistakes can happen but by far and away the most likely basis for a claim by an employee against an employer in such situation is that the employer has failed to demonstrate a proper decision making and execution process in making staff redundant.

Redundancy payment – how much does it cost/does the employee get?

Some employers pay more than the statutory amount but the statutory sum, which is the sum that employers must pay, is made up of a simple algebra formula being number of years of service (this is completed years of service to a maximum of 20) multiplied by the gross weekly wage (maximum £350 as of the 1st February 2009) x 1, or in the case of years of service over 41 x 1½.

In addition the employee is entitled to all their benefits under their contract which would apply under a notice period.

Redundancy is not a pleasant topic, either for employers or employees, but is a fact of economic life. As in all such circumstances, matters have to be dealt with on an individual basis but there is no reason why the process cannot be completed in a proper legal and efficient manner if dealt with appropriately by the company.