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Redundancy

Dismissal by reason of Redundancy in the workplace is disruptive and traumatic for both employee and employer.

It is important to understand what redundancy is: In employment law, redundancy procedures can only progress fairly if the employer has genuine reasons and grounds for making employees redundant. These grounds include: the employer having ceased to trade; the employer being forced, for whatever reason, to relocate operations to somewhere too far away for the employee to be reasonably expected to commute; the employer having no further use for an employee’s skills, because those skills are “expected to cease or diminish,” or they have already “ceased or diminished”; the employer has stopped, or is planning to stop, doing whatever type of work the employee was originally hired to do.

Redundancies can therefore arise for a variety of causes – workforce reduction, business closure or when the work is no longer needed, perhaps through a change of business circumstances, or the introduction of new work practises e.g. automation. Also, office moves can result in redundancy.

To claim unfair dismissal by reason of redundancy an employee must have had two years continuous service with the employer.

In case of redundancies there are formal procedures which every employer should adhere to. Employees may be eligible for certain rights including consultation with the employer, time off to look for work, redundancy pay and sometimes a defined consultation period. Consultation can be individual or collective, subject to the number of employees the employer is ‘contemplating’ making redundant within a certain period of time.

Where there are less than 20 employees being considered for redundancy within a 30-day period, there is no defined period of minimum consultation. However, an employer will still be expected to hold a fair and transparent consultation process with employees who may be ‘at risk’ of redundancy.

If you are one of several employees who all perform the same role, function or hold the same job title, but only a partial reduction of that role or function is needed, the employer may decide to place the employees into a ‘pool’ of at risk employees, and then apply a scoring process. Each employee would be scored in accordance with a pre agreed criteria (these criteria would usually be agreed with employees as part of the consultation process) and the employee with the least score would be the person to be made redundant. This procedure is used to help ensure a process of selection is fair.

Sometimes, an employee could be in a ‘pool of one’, whereby the employee at risk is the only person to perform a particular role or function.

If an employee has been advised that they are at risk of redundancy or going to be made redundant, there is a positive legal obligation on the employer to consider whether there is any suitable alternative employment available. Whether or not an alternative position is ‘suitable’ is a subjective test, which means that it has to be ‘suitable’ to the employee. So, for example, a loss in status could be considered unsuitable by the employee, even if the salary and conditions remain the same.

If you are selected for redundancy, your employer must set out your contractual and statutory entitlement to notice and redundancy pay. Your employer may also choose to make a payment in lieu of your contractual notice as oppose to requiring you to work it. Upon termination of employment you would also be entitled to be paid any accrued but untaken annual leave up to the termination date. There is no statutory right of appeal in redundancy dismissals, however, most employers will offer a right of appeal as part of a fair process.

As an alternative to going through a redundancy process, your employer may decide to hold a Protected Discussion and offer you a Settlement Agreement. If you receive a Settlement Agreement your employer will usually make a contribution towards your legal fees. Confidentiality is imperative, so it is important that you do not discuss the terms of the settlement offer with anyone other than our specialist employment team, or your immediate family members (provided they also maintain confidentiality)

Our specialist employment team will also be able to advise you through the redundancy process, and any subsequent claim for unfair dismissal on the grounds of redundancy.

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