Is there a set procedure for handling redundancies?

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    Nicola Mullineux

    Nicola Mullineux Contributor, Peninsula Business Services Full Member - Verified Business

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    Redundancy situations commonly arise when the business experiences a full loss of work or a reduction in a certain type of work in a certain location or department. When making redundancies, the specific procedure to follow will depend on the circumstances, however, there are some statutory requirements which must be complied with, which again will differ depending on the number of posts which are to be made redundant.

    When conducting any type of redundancy, the procedure you should follow should include the following steps:

    1. Creating a business case for the redundancies.
    2. Identifying the pool for selection
    3. Communicating the situation to employees whose job is at risk.
    4. Individual or collective consultation depending on the scale of redundancy.
    5. Applying selection criteria and notifying the selected employees.

    Small-scale redundancy

    Redundancies which include less than 20 posts being made redundant at one establishment in a period of 90 days are classed as small-scale redundancies. As well as following any workplace redundancy policy, an employer should follow a procedure in order to avoid a finding of unfair dismissal.

    Unfair dismissal can apply to a redundancy dismissal and it is possible to have a finding of unfair dismissal even when redundancy was inevitable because the whole workplace was closing down.

    Consultation with employees is key to this procedure. A series of meetings should be held – the number of which will be dictated by circumstances but a minimum of three will normally be necessary to ensure everything is dealt with. Final meetings should be held individually with those to be made redundant. The law does not set a timescale for individual consultation, however, it does require it to be “meaningful”.

    Large-scale redundancy or collective redundancy

    Large-scale redundancies are those which include at least 20 posts being made redundant at one establishment in a period of 90 consecutive days. This triggers an obligation for the employer to hold collective consultation.

    The minimum length of collective consultation, again, depends on the number of redundancies. If there are between 20 and 99 proposed redundancies, then the employer should begin the collective consultation 30 days before the first redundancy termination takes place. If there are 100 or more employees at risk of redundancy, then in order to comply with the statutory requirement, the employer should start the consultation period 45 days before the first redundancy takes effect.

    The consultation should be done with employee representatives on behalf of all of the affected workforce. Where there are no existing representatives in the company who can take part in this consultation, employers will need to hold an election.

    Selection

    Where a decision needs to be made on exactly who is to be made redundant, selection criteria needs to be agreed and then applied to all employees.

    Normally, this is done on a points based system. By way of rudimentary example, a factory which makes small car parts may use a criterion of number of parts made per day. Those who make 50 or more parts per day are awarded 5 points; those who make 40 – 49 parts a day will get 4 points ets. Those with the lowest points when all criteria have been applied will be made redundant. Criteria should be as objective and measureable as possible.

    Which terminations of employment count as redundancies?

    Voluntary redundancies – Yes

    Regardless of whether some or all employees have volunteered to be made redundant in a genuine redundancy situation, they count towards the total number of redundancies. For example, if the employer proposes to make 23 employees redundant, 6 people volunteer but the employer has to select the other 17, there are still 23 redundancies being made, so collective consultation is triggered.

    Redeployment – Yes

    Making a post redundant but redeploying the employee in a different post still counts towards the number of posts made redundant. For example, selecting 22 employees for redundancy, of which 4 are subsequently redeployed in a different role within the company, still leaves the number of redundancies over 20.

    Fixed-term contracts – No

    If there are employees whose fixed-term contracts are naturally coming to an end at the same time as a redundancy proposal, then those fixed-term employees are not to be included in the calculation. Fixed-term contracts must be included only if the employer proposes to end the contract early on grounds of redundancy.  

    Redundancy Payment

    Redundant employees who have at least 2 years’ service are legally entitled to receive statutory redundant pay. The amount of pay is based on the employee’s age, length of service and weekly pay which is capped at £479 (from April 2016) and a maximum of 20 years’ service is taken into consideration.

    For example, an employee who is 30, has 4 years’ service and earns £450 per week will be entitled to £1800. An employee who is 45, has 10 years’ service and earns £510 per week is entitled to receive £5,748.

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