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Redundancy Fact Sheet


During these unprecedented times of a national pandemic which have crippled the economy, many businesses are facing tough decisions ahead, one of which may be to consider redundancies.

It is important to note at this point that redundancies should be the last point of call for businesses even during these exceptional times.  Businesses may expose themselves to the risk of unfair dismissal claims being brought against them if they do not follow the correct procedure or indeed, it may be argued in the current situation, if they have not placed employees on furlough leave prior to considering redundancies.  This is especially bearing in mind that the concept of furlough leave was introduced in order to keep people in work.

If a business is considering making redundancies, it must be mindful that this will have an impact on the rest of the workforce and should expect to experience a drop in workplace morale.

Redundancy defined

Redundancy is defined in section 139(1) of the Employment Rights Act (ERA) 1996.  Redundancy is where the dismissal of the employee is “wholly or mainly attributable to” the employer:

  • Ceasing or intending to cease to carry on the business for the purposes of which the employee was employed by it (business closure); or
  • Ceasing or intending to cease to carry on that business in the place where the employee was so employed (workplace closure); or
  • Having a reduced requirement for employees to carry out work of a particular kind or to do so at the place where the employee was employed to work (reduced requirement for employees). Note that this particular situation means that the business does not necessarily having to be experiencing a downturn in work.

The redundancy process

It is imperative that a business follows the correct procedure when considering redundancies in order to reduce the risk of an employee pursuing an unfair dismissal claim against them.

An employer should first identify the pool for selection of whom may be subject to redundancy, discuss voluntary redundancies with applicable employees (if deemed appropriate) and then proceed with consultations.

If an employer is considering making 20 or more employees at one workplace redundant within a period of 90 days then a collective consultation is required with a recognised trade union or elected employee representative, with minimum time scales that will need to be adhered to.  If an employer is seeking to dismiss 100 or more employees, then the consultation period is at least 45 days before the notification of redundancies. For employers seeking to dismiss 20-99 employees, then the consultation period is at least 30 days before the notification of redundancies.  For an employer seeking to make individuals redundant then individuals still need to be consulted in a timescale that is deemed to be fair and reasonable to avoid the employee claiming unfair dismissal.

If after consultation there are not any employees willing to take voluntary redundancy (if it was deemed appropriate to seek volunteers), then an employer must make a selection from the pool of individuals who may be made redundant after applying objective selection criteria.  The employer must write to the employees concerned and inform them they are at risk of being made redundant.    

After selecting those individuals who are at risk of redundancy the employer should conduct a least one further consultation with the relevant individuals.  The employee’s viewpoint should be carefully considered and any suggestions that the employee makes should be noted.  Employers should also consider whether they are able to offer alternative employment in another area of the business.

If after following all of the above procedures an employer decides to make an employee redundant then they should inform the employee in writing, allowing for the sufficient redundancy notice and detail any redundancy payment.

It is good practice to give an employee the right to appeal the decision in accordance with the ACAS Code of Practice although there is not a statutory right to an appeal.

For advice on this, or any other employment matter, contact the employment team on 01905 723 561 or email: Guy.salter@smesolicitors.co.uk or Sonia.ali@smesolicitors.co.uk 

Added: 02 Jul 2020 11:48


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