Legal Advice for Redundancy Rules for Employers

Only some specific situations justify a redundancy. Even if a business is facing particularly challenging times, not all reasons for dismissal will fall under the rules of redundancy.

If your business has planned to close, relocate, or reduce its operations, whether fully or relating to specific sites or departments, redundancy may be considered. It may not be used to dismiss employees based on performance or conduct issues.

An employer may make employees redundant regardless of their identification as a protected category, or if they are on maternity leave. However, it’s important to prove that the employee was selected for redundancy for a legitimate reason to avoid discrimination claims in the future,

Making an employee redundant for the following reasons will make the dismissal unfair:

• Requesting or taking any form of family leave, such as maternity, pregnancy, or paternity leave.
• Requesting different working arrangements, such as remote, flexible, or part-time work, or being in any specific working arrangement
• Taking action as part of a union or being a representative
• Exercising valid legal rights as a worker, such as demanding National Minimum Wage or raising health and safety concerns
• Whistleblowing
• Discussing remuneration, or for any reason related to pay

It’s not unfair to dismiss employees who may fall under any of these categories: a dismissal will only be deemed unfair if they are dismissed or selected for redundancy because of them.

While you may decide that redundancy would be justified, you may still be liable for future claims if alternative solutions to redundancy are not properly explored. These may include:

• Temporary lay-off
• Reducing employees’ pay, working hours, or the business’s work week
• Transferring, redeploying, or retraining workers
• Suspending overtime or recruitment activities
• Offering sabbatical or early retirement options

Any alternative considered must be tailored to your business’s situation and organisational structure. If any alternative solutions are applied, employment contracts should be updated accordingly to avoid future claims related to a change of employment terms.

You may offer to negotiate terms for employees to voluntarily leave the organisation, offering incentives such as compensation. As the terms will be negotiated with the worker, this option is often more costly.

Employees may volunteer and offer their settlement agreement terms. There are situations in which you may need to select workers out of an excessive number of offers, or may still need to carry out compulsory redundancies if not enough employees volunteer. Our Redundancy Solicitors for Employers can advise you throughout the process, ensuring any redundancy and selection of employees is carried out fairly and adhering to employment law.

If compulsory redundancy of employees is deemed necessary, a selection process will be carried out. The possible candidates should work within similar roles and departments, unless the redundancy process has begun as a consequence of a business closure.

The selection of employees who may be at risk of redundancy should be based on criteria such as quality of work, experience, and conduct record. It must not consider protected characteristic. The criteria and how it has been applied to all candidates should be properly documented.

Employees who are being considered for redundancy must be made aware of the process. During consultations, employees must be informed of the selection criteria and how it is being applied. They may discuss the application of criteria towards them, and their feedback should be documented and properly considered.

For collective redundancies, which affect 20 or more employees within a 90-day period, collective consultations must be planned, which would include union representatives as applicable. You must also notify the Redundancy Payment Service (RPS) or face possible unlimited fines.

Whether individual or collective redundancies are being considered, it’s vital to allow for enough time for meaningful consultations with those affected. Redundancy pay and notice should be made clear, and employees may appeal your decision.

If redundancy is ultimately decided, those affected must be given a notice period. This is equal to 1 week’s notice for each year of employment, for a maximum of 12 weeks’ notice.

You must inform employees of the terms of termination, including when their contract will end, redundancy pay, and how any of the terms have been decided. They must receive the option to appeal, and reasonable time off work to search for new employment.

There are two types of redundancy pay. Statutory redundancy pay applied to any worker that has been employed for over 2 years, and is not taxed up to £30,000. This will be calculated based on the age of the employee and their length of employment. For every year of employment:

• Employees between 18 and 22 years old will receive half week’s pay
• Employees between 23 and 40 will receive one week’s pay
• Employees 41 and older will receive one and a half week’s pay

Additional contractual redundancy pay can be included in employment contracts. Some employers may not offer this, and some businesses are obligated to. If redundancies go ahead, employers may make the payment as calculated and within the terms the employee has been informed of.