Rules of redundancy

Redundancies are a fact of life and need to be approached in a fair way says Julian Goulding.

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 whether we are still in recession or benefiting from green shoots of recovery, unemployment continues to rise as employers seek to cut costs.

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. 1.

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

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.iii The place of work was closed where an employee is employed.
• 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 ?

• 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.

You must consultConsultation provides an opportunity for the employer and the employee affected by the redundancy situation to discuss the redundancy 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.

Collective redundancies

An employer looking to make more than 20 employees redundant must also 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.

Common mistakes

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

Redundancy

paymentsSome 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 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 1 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 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.

Julian Goulding is senior partner of solicitors Cheyney Goulding

Taken from Charity Finance

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