Redundancy

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• Unfair Dismissal

If, in the unfortunate event, an employee’s post has become redundant, they will be entitled to receive a redundancy payment, provided that they have been employed as an employee for more than two continuous years.

The amount of tax-free statutory redundancy pay is dependent on the employee’s age and length of time in employment. If the post is not genuinely redundant, or a fair procedure has not been carried out, an employee may have the right to claim that he or she has been unfairly dismissed (if they qualify for making a claim).

The Process

Under the Employment Rights Act 1996 “redundancy” occurs only in the following three circumstances:

• Business closure
• Workplace closure
• The needs of the business for employees to do work of a particular kind has ceased or diminished

An employer must consider suitable alternative employment for a redundant employee. Not doing so may make the dismissal unfair. If the employer offers suitable employment and the employee unreasonably refuses to take it, then the employee is still dismissed and no statutory redundancy payment may be made.

An employer should carry out certain procedures before any redundancies are made to ensure a fair procedure to avoid claims including:

• Selecting a fair pool of employees at risk of redundancy using a fair criteria
• Warning the employees that their jobs are at risk and consulting with them
• Considering alternative employment in the business and offering a position where appropriate
• Holding consultation meetings and allowing employees to be accompanied to it if they choose
• Allowing an appeal to the redundancy decision

Collective Redundancies

Where an employer proposes to make large scale redundancies of 20 or more employees within a period of 90 days or less, there are additional legal obligations and processes that must be followed.  Failure to adhere to these obligations can lead to huge financial claims in compensation, criminal liability and declarations.