With the current economic climate, redundancies are now a word making the headlines again. Redundancies can give rise to claims for unfair dismissal and in order to avoid this, employers need to be aware of certain legal traps.
If challenged, not only must the employer be able to demonstrate that redundancy was the real reason for a dismissal but equally importantly that the correct procedures were followed.
Here are some of the key aspects for employers to consider:
Time limits
In most cases, an employee cannot claim unfair dismissal unless they have been with the same employer for more than two years. This is the relevant time for an employee to become entitled to receive a statutory redundancy payment.
The reason
A genuine redundancy situation is one where the employer has ended or intends to end business, the location of the business is changing or the requirement for employees undertaking a particular kind of work has ended or diminished. Unless one of these applies, there may be an unfair dismissal rather than a true redundancy.
The group
Employers cannot select individuals for redundancy at random or without considering everyone who undertakes a similar task. This means identifying the group or groups of people that may be affected and the law requires that all those people are considered as part of the ‘redundancy pool’.
Selection criteria
The employer must decide the basis upon which the redundancy decisions will be made and that selection criteria should be fair and objective. It is acceptable to base redundancy decisions on the ability of individuals and the businesses are entitled to keep their best people but they must be able to justify the selection decisions.
Consultation
All those who are at risk should be given warning of the likelihood of job losses and there must be a genuine consultation process. If there are to be 20 or more redundancies, there may be additional specific statutory consultation and notice requirements. The purpose of the consultations is to consider alternatives such as reducing hours, cutting pay, redeploying staff elsewhere or offering voluntary redundancy.
Notification
After the consultation process is completed those employees who have been selected should be invited to a dismissal meeting at which they are entitled to be accompanied by a colleague or trade union representative. The dismissals should be confirmed in writing. There is a right of appeal.
Alternative employment
There are rights for employees who are being made redundant to have reasonable time off to look for other employment or arrange training. As part of the redundancy procedure employers must also consider with certain employees whether they could be employed in another role within the business.
Payment
The amount of statutory redundancy pay is calculated on the basis of the number of years’ service, age and weekly pay.
The above information is not intended to be a complete or definitive statement of the law.
