With many businesses struggling in the current climate, a lot of them are looking to try and save costs for the longevity of the business. An increasing number of businesses, including well-known names, are finding themselves in the unfortunate position of having to make or consider redundancies.

Employers need to know that whilst making someone redundant is a fair reason for dismissal, it is extremely important to get the process right. Failure to do so could see them in trouble in the Employment Tribunal. The employee may be successful int their claim and be awarded significant compensation. An employee/ ex-employee does not need to pay to issue a claim in the Tribunal and with many facing the prospect of not being able to secure another job, many of them have nothing to lose by submitting a claim. This can however be a massive expense to the business in terms of defending the claim and seeking legal representation but also it can cause a huge amount of stress and time for the business owners and management team involved.

Redundancy can be difficult, challenging and distressing for all involved and ensuring it is done correctly is vital. For employers it is often a fine balance in making sure that those selected for redundancy are treated fairly, while the productivity and moral of the retained staff remains high.

Redundancy legislation is far from straightforward, and an employer need to know what their obligations are, including employees’ rights and the correct procedures to follow. We can therefore not stress enough how important it is to seek advice before you start any process. Investment at the outset can save you a headache in the long run.

When is redundancy appropriate?

Redundancy generally occurs if there has already been, or is going to be, either: a business closure, or a workplace closure, or the organisation’s circumstances have changed and there is a reduction or proposed reduction in the need for employees.

What does a fair redundancy process look like?

A fair redundancy process involves four things. These can be summarised as follows:

  1. Consultation
  2. Reasonable selection pools
  3. Reasonable selection criteria and scoring
  4. Consideration of alternative employment

1. Consultation.

This involves an initial announcement to those that may be affected by the proposals of the business to make on redundancy and will include the reasons for commencing the consultation process and the business case e.g. a downturn in work means that we need to look to reduce the workforce.

Following an announcement, you would then look to consult the affected employees on a one to one basis by inviting them to a meeting, giving the correct notice and citing the correct statutory rights.

This meeting should be conducted with an open mind and employers should genuinely listen to employees who may come up with alternatives to redundancy which had not been considered. This consultation process is extremely important.

Unless the employer is planning to make more than 20 people redundant, there is no legal timetable for consultation although, the proposed timescales for redundancies of 19 or less should be completed within a timeframe that allows for a meaningful consultation rather than a rushed process. Consultations should take place at an early stage and allow employees enough time to make suggestions and present ideas on why they should not be dismissed. Ideally, at least two meetings should take place before the decision to terminate employment is confirmed.

Finally, employers should not forget to consult with all those affected, including those on maternity or other parental leave or on long term sick leave.

Redundancy is a time of great uncertainty and fear and it is important to ensure that communication with employees is clear and that they fully comprehend the process and the implications.

2. Reasonable selection pools.

Unless you are looking to remove one specific role which is unique or a whole team, you will need to identify a pool of people from which you then select individuals for redundancy. Employers have a choice about how narrow or wide the pool is, and tribunals rarely interfere with this choice provided that the employer can show that they are not motivated by trying to achieve a predetermined outcome. One word of warning though, do not chose a selection pool based on Job title or Job description alone, look at the roles that the employees actually perform.

3. Reasonable selection criteria and scoring.

You’ll need to draw up fair and objective criteria to apply to those in the pool, to select the employees who will be made redundant. Typical selection criteria include attendance, disciplinary record, performance, skills, qualifications and length of service. You can also apply a weighting to each category so that some categories carry more weight than others. Sometimes you will need different criteria for different groups of employees. An obvious example: using sales figures would only be appropriate for sales staff.

It is also important not to use criteria which may discriminate on the grounds on disability or pregnancy, for example. Thus, absence relating to pregnancy or other types of family leave should not be included. Ideally, two managers should assess and score, with an average taken or there should be some moderation of different manager’s scores. This is to avoid allegations of bias from individuals selected.

You should not share with employees other employees scores, but you can give an average score of the pool, explain the cut off score (so they can see how close they came to meeting or not meeting the grade) or show the complete scoring matrix but anonymise the individuals.

4. Considering alternative employment.

Finally, the employer must take reasonable steps to establish whether there are any other positions either within the immediate business or elsewhere if it is part of a large group. Even if such positions may be considered to be less senior to the person selected for redundancy, the opportunity should still be made available for the employee to accept or decline.

Finally, although an employee does not have a statutory right to appeal a redundancy, many employers will offer an appeal, and it is very much encouraged. It allows an employer an opportunity to review the decision, make sure it is correct and fair, and to understand the employee’s objection and what they want to resolve the matter. The employer will be able to evaluate any risks associated with the decision made or the process involved and provides the ideal opportunity, where necessary or appropriate, to negotiate or settle any dispute to prevent the matter proceeding to an Employment Tribunal however, we always recommend seeking expert advice before entering into any settlement discussions.

With the job market looking bleak for many industries and the chances of finding new employment for many employees who have been made redundant there is sure to be an increase in the numbers of employees instigating an Employment Tribunal claim. There is no financial cost to the employee in submitting a claim to the Employment Tribunal so many will think they really have nothing to lose. This makes it even more important to ensure that from an employers’ point of view there is a sound and well documentation case for the necessity of the redundancy and a clear and fairly conducted process.

We can provide advice throughout every step of the way if you are considering making redundancies. For further advice on this or any other employment matter please contact Absolute Works on 01926 355560