Many employers will consider redundancies when looking at ways of cutting costs. When making redundancies, it is important for employers to seek legal advice to ensure they are following best practice.
Although many employers may have a good reason for making redundancies, it is important that an employer follows a reasonable procedure which includes consultation, a fair basis for selection, and considers any alternatives forms of employment.
Our highly regarded and efficient redundancy solicitors are on hand to guide you through the process, minimising any risk of potential employment claims and deal with the formalities of making staff redundant.
Are There Alternatives To Making Staff Redundant?
Before making an employee redundant it is important to consider alternative steps to saving money. These could include:
- Reducing staff overtime
- Freezing pay increases
- Freezing recruitment
- Reducing the number of temporary or agency staff
How Does the Redundancy Procedure Work?
There is not a set procedure that employers must follow; however, it is vital that they act reasonably throughout.
The best way to protect your business is to ensure you have a redundancy policy in place. Any redundancy process should include three key elements:
- Consideration of alternative employment
The consultation period is determined by the number of employees you are looking to make redundant. If there are fewer than 20 redundancies taking place, then there is no minimum consultation period applied. However, each employer should consult with its employees for a reasonable period and failure to do so could lead to claims for unfair dismissal.
If you are looking to make between 20 and 99 redundancies, you have an obligation to consult with employees for no less than 30 days. For 100 employers or more, this period is extended to 90 days.
The selection process will depend on the nature of the redundancy. If there is a sufficient number of volunteers for redundancy, this process can be straight forward.
If you need to make compulsory redundancies, you will need to ensure you have an objective and justifiable basis for selection.
A way to do this is to identify a pool of employees that you can select from. This pool of employees must be made up of staff who carry out the same, similar, or interchangeable roles.
Once you have a pool, you will then need to apply a set of objective criteria and score each employee against this. The criteria could include performance, skills, and qualifications.
We highly advise you steer clear of criteria that could give rise to allegations of discrimination such as age, length of service or sickness records.
Consideration of Alternative Employment
An important element of the redundancy process is to consider a suitable alternative role for those you are looking to make redundant. This is because redundancy should be a last resort. If you fail to look for suitable positions for employees, you may leave yourself open to expensive tribunal claims.
When looking for suitable alternative roles you may wish to look at roles that are similar in terms of:
- Nature of duties
If you find a suitable alternative role and the employee refuses this, you may be within your rights to withhold their redundancy pay.
What Is an Employee Entitled To?
If an employee is made redundant and has at least two years’ service, they are entitled to a statutory redundancy payment as a minimum. This is currently as follows:
- Half a week’s pay for each full year where the employee is under 22 years of age
- One week’s pay for each full year where the employee is 22 years of age or older, but under 41
- One and a half weeks pay for each full year the employee was 41 or older.
You may also offer an enhanced redundancy pay as an incentive for staff to take voluntary redundancy.
Our People Services team have extensive knowledge and experience with guiding businesses through the redundancy process while minimising risks of claims.
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