A brief explanation of what constitutes a redundancy is provided below.
We support employers to ensure that they get the redundancy process right when forced to dismiss employees because of a true redundancy situation. Getting the procedure right is necessary; as there is always the risk of a claim for unfair dismissal or discrimination.
A true redundancy situation, where the correct procedures have been followed and selection process has been objective and fair is a good defence to a claim.
To prevent claims employers are often encouraged to execute a settlement agreement with the employees being made redundant.
We advise employees who are being made redundant (or at risk) of redundancy of their employment rights. We also ensure that an employee understand the consultancy process and whether or not a proper procedure has been followed. We will advise an employee as to the redundancy payment due. The minimum payment is statutory redundancy. Some employer’s offer an enhanced redundancy packages and details regarding this can usually be found in the staff handbook or letters provided by the employer.
An employer may not only make a member of staff redundant; they may require the staff to complete a settlement agreement. We will advise you on the terms of the agreement and attempt to maximise any award on offer if this is necessary.
Redundancy – law
- What is a redundancy?
A redundancy occurs in the following situations:
- The job employees use to carry out has disappeared.
- The organisation is closing down completely.
- The requirements of the business has diminished.
By making a member of staff redundant, you are dismissing them from your employ. Any employee who has worked for an organisation for two years has a legal right not to be unfairly dismissed. It is important when carrying out this procedure therefore that the dismissal is fair.
- Who is to be made redundant?
The employer must select objectively and fairly a redundancy pool. A redundancy pool is the group of people who may be at risk of being made redundant. Pools will usually comprise of people working in the same department doing similar jobs.
The wrong pool selection can give rise to a claim.
Employers have a duty to consult with the employees who may be made redundant. This amounts to making the employee aware of the redundancy situation and the reasons why they are at risk of redundancy.
The length of the consultation period is not defined (unless over 20 employees). The number of meetings is not specified either. However two or three meetings are not unusual.
There is the odd occasion when the redundancy pool is only one person. However care must be taken to ensure that this is the correct pool.
Women on maternity can be added to a pool, but care will need to be taken when making such individuals redundant.
- Selection for redundancy
An objective selection process is the best. Usually a score card or redundancy matrix is used to calculate objectively who is selected for redundancy.
- Statutory redundancy pay
Provided a person has been employed for over two years they will be entitled to statutory redundancy pay. Between the ages of 21 and 40 the person is entitled to a week’s pay for every complete year employed, subject to the statutory cap. For a person over 41 it is the same as above, but an additional multiplier of 1.5 is used in the calculation.
There is a statutory right to notice and it must be followed.
- 3 months or more continuous employment the person is entitled to a week’s notice.
- A week’s notice, for each complete year employed up to a maximum of 12 weeks.
- Should the employer have additional notice provided in a contract, then this notice period must be given.
- Enhanced redundancy packages
These are offered by employers. It is not compulsory, but can be used to so that there are voluntary redundancies, thus reducing the need (or numbers) for compulsory redundancies.