Redundancy

Redundancy is, in effect, dismissal. An employee will be deemed to have been dismissed for “Redundancy” if the dismissal is wholly or mainly due to the fact that: -

• The employer has ceased or intends to cease either, carrying on the business for the purpose of which the employee was employed, or, carrying on business in the place where the employee was employed.
  Or
• The requirement of the business for employees to carry out work of a particular kind, or to carry out that work in the place where the employee was employed, has ceased or diminished or is expected to cease or diminish.

When redundancies are contemplated, the employer should: -

• Set out a policy for dealing with redundancies, including any dismissals that need to conform to the three-stage procedure. (See Dismissal)
• Consult with employees, or their representatives where required to do so under statute.
• Consider if there is any obligation to transfer employees to other duties or to an associated company.
• Use fair criteria for selection of candidates for redundancy.
• Consider any alternatives to redundancy suggested by employees.
• Consult with employees individually.
• Give notice to those employees selected for redundancy.
• Make appropriate payments to employees.
• Keep accurate records of the whole procedure.

There many other issues to consider. For instance, allowing an appeal against your decision, time off with pay to seek alternative employment, trial periods for those selected for alternative work.

Employers should be aware that, although an employee has less than the two years service required to qualify for redundancy payment, they might still be able to bring a claim for unfair dismissal. Even employees with short service – less than one year – can bring claims for unfair selection for redundancy on specific grounds, which attract unlimited compensation awards. For example, dismissal on the grounds of sex, race, disability, health & safety.

Bearing in mind that redundancy is a major reason for Employment Tribunals claims, employers are advised to take professional advice if they are unsure as to the reasons for the dismissals or the procedure to adopt.

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