Essential information on the Redundancy Procedure

Most businesses have suffered several blows in the past two to three years following Brexit, the pandemic, lockdown and the crisis in Ukraine. Now consumer-facing industry sectors, such as hospitality and retail, are struggling to get back on their feet and the economic crisis is adding further problems to be overcome. 

The only solution for many organisations is to reduce their workforce and consider redundancies, however difficult that course of action may be. If you have been told you may be made redundant you should ensure that your rights are maintained, as many companies are unaware of or fail to comply with the employment rights law when undertaking a redundancy programme.

Daniel Theron, a partner, pointed out “a redundancy procedure must be seen to be fair and every effort should be made to avoid redundancy if at all possible. Many employees have never faced redundancy and are unaware of the procedure and their rights. For example, if an offer of employment in an alternative role is made to an employee, they may not be able to judge whether it is valid or fair.” Daniel further mentioned, “In order to ensure complete clarity and avoid repercussions, many companies pay for their employees to have limited legal advice (often a nominal fixed fee) from an independent law firm, other than the company’s legal advisors, to ensure that there the employee fully understands any settlement agreement provided to them, so they may make informed decisions.”

When can a company make an employee redundant?

Redundancy can only be invoked if the business seeks to dismiss an employee that is no longer required in the business due to the fact that their job is no longer necessary. For example, if new innovation in technology or equipment has replaced the need for the employee to carry out tasks, the business is changing and no longer undertaking certain work, or the business is relocating or closing down. Redundancy can only be valid if the employee’s job no longer exists. The employees’ rights must be observed and statutory procedures must be adhered to.

Before employers embark on a redundancy programme they should make every attempt to avoid redundancies. The routes to consider to avoid redundancies may be through laying off freelancers and self-employed contractors or ceasing to use casual labour. Limiting or banning overtime or finding employees alternative work within the business. 

Alternative employment

It may be possible to offer an employee alternative employment and redeploy them in a different role. Such an offer must be made in writing before the employee’s contract ends, with a full explanation of the differences between the roles. The employee does not have to apply for the role and the new job should begin within four weeks of the end of the redundant role. This may mean that the employee could be treated as not having been dismissed. However, unreasonable refusal to accept a suitable alternative role could result in the loss of the entitlement to redundancy pay.

Statutory Redundancy Pay

Contracted employees of two years of continuous employment are entitled to statutory redundancy pay at the rate of:

• 1.5 weeks’ pay for each full year of employment after their 41st birthday
• a week’s pay for each full year of employment after their 22nd birthday
• half a week’s pay for each full year of employment up to their 22nd birthday

The cap for the length of service is 20 years.

Redundancy Procedure

The selection criteria must be fair without discrimination. The reasons for selecting employees for redundancy can include:

• the disciplinary record
• standard of work
• attendance
• skills, qualifications or aptitude
• length of service – “last in first out” this could potentially be indirect discrimination if one group of employees is more significantly affected than another.

The following reasons should not be applied as they could be considered automatically unfair:

• all aspects relating to maternity, such as pregnancy
• all reasons related to the family such as parental leave, time off for dependants and paternity leave including adoption leave
• acting as an employee representative or as a trade union representative
• membership of a trade union or failure to join a trade union
• all discrimination – including age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation
• reasons relating to working hours and pay

Failure to undertake redundancy consultations will almost certainly result in the redundancy being considered unfair and independent legal advice should be sought. The consequence of this could be that the employer is taken before the Employment Tribunal.

Where more than 20 employees are being made redundant within a 90-day period at one organisation, the employer must follow the collective consultation rules, including consulting with trade union representatives. 

Redundancies concerning less than 20 employees selected have no set rules. It is strongly advised that a consultation is observed to avoid the suggestion that the procedure was unfair.

Giambrone & Partners’ highly experienced employment lawyers point out that a consultation that does not result in an agreement will not impact badly on either party as having the consultation demonstrates that an attempt to avoid redundancy was undertaken. Our lawyers point out that all parties should make every effort to cooperate.

Should the parties settle the matter by way of a compromise agreement, independent legal advice on the implications of such an agreement should be sought. It is in the interests of both parties to be advised on the settlement agreement to avoid future claims being made.

Redundancy is a complex unfamiliar experience for most people and employees selected for redundancy are advised to seek legal advice before accepting an agreement, or an alternative role or you suspect you have been discriminated against, Giambrone & Partners’ employment law department has many years of experience in assisting and advising employees to obtain the best possible settlement during the course of a redundancy procedure.

Daniel Theron advises on litigation in, employment, cross-border debt recovery and defamation, as well as family law. Daniel has  considerable expertise in contentious employment matters, representing claimants and defendants and cross-border family law, including complex financial arrangements.

Daniel enjoys a reputation of being meticulous in his analysis of the merits of a matter and tenacious in his pursuit of a successful outcome for clients. He frequently impressively navigates challenging situations culminating in an excellent level of achievement, in excess of all expectations

If you believe that you have been unfairly selected for redundancy or that the redundancy procedure was flawed please contact Daniel’s clerk Sam Groom on SG@giambronelaw.com or please click here.