Making Redundancies

I need to make some of my employees redundant – what do I do?

If you are thinking about making redundancies, take legal advice early on how to manage them effectively with minimum disruption to your business and upset for your employees.

Redundancy is a potentially fair reason for a dismissal and in many cases, an employer’s liability in respect of a redundancy dismissal will be fully discharged by the payment of a statutory redundancy payment.

For a dismissal to be by reason of redundancy, a redundancy situation must exist.  This means that work of the particular kind in the place that it is carried out must either be stopping altogether or reducing.  In such circumstances, an employer should consider whether it is all of his business that is affected by the reduction or ending of work or just one part of his business.

Alternatives to compulsory redundancy

An employer faced with these difficult circumstances should consult with his employees or their representatives to look at ways of avoiding a compulsory redundancy situation.  This could include asking the employees or their representatives for suggestions. 

If alternatives to compulsory redundancy cannot be reached, then the employer needs to carry out a full and fair procedure including putting the employees at risk of redundancy into a pool for selection after devising an objective selection criteria to score the employees in that pool.  Consideration should be given to other groups of employees who are doing similar work to the group from which the selections are to be made and/or whether the employees’ jobs are interchangeable.

Selection for redundancy

The selection criteria must be objective and it must be applied in a reasonable manner.  Examples of objective selection criteria are skills and knowledge, versatility, adaptability, disciplinary and attendance records. 

Care should be taken however if an employee scores low on attendance due to ill health and that ill health is due to a disability, selection of that employee on health grounds may amount to disability discrimination.

The employer should consult with employees and consideration should be given to any alternative employment there may be.

If you as an employer feel you may need to reduce your workforce or restructure, please contact Pearson Solicitors Employment Law team.