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Redundancy

Any sort of change can be disruptive, none more so than the threat of redundancies. However, good communications between management and employees can often help an organisation get through the process with the minimum of pain.

The right to be collectively consulted applies when an employer proposes to make 20 or more employees redundant at one establishment over a period of 90 days or less. Employers should also consult individual employees. Case law has shown that dismissals have been found to be unfair where a union has been consulted but not the individual.

Consultation

Employers are required to consult with the 'appropriate representatives' of any of the employees who may be affected (directly or indirectly) by the proposed dismissals or by any measures taken in connection with those dismissals.

The consultation should include ways of avoiding the dismissals, reducing the number of employees to be dismissed, and mitigating the effects of dismissals. Consultation must be undertaken by the employer with a view to reaching agreement with appropriate representatives on these issues. This duty applies even when the employees to be made redundant are volunteers. Failure to comply with the consultation requirements could lead to a claim for compensation, known as a protective award.

Consultation should begin in good time and must begin:

  • at least 30 days before the first dismissal takes effect if 20 to 99 employees are to be made redundant at one establishment over a period of 90 days or less
  • at least 90 days before the first dismissal takes effect if 100 or more employees are to be made redundant at one establishment over a period of 90 days or less.

Employees may be entitled to redundancy payments if they have been continuously employed for at least 2 years and are dismissed due to one of the following possible reasons for redundancy:

  • closure of a business
  • closure of the employee's workplace
  • a diminishing need for employees to do the available work

Although, an employee will need 2 years service for a redundancy payment, dismissal due to redundancy can happen at any point, the fairness of a dismissal may be challenged if an employee has at least one year's continuous service for employees in employment before 6th April 2012 or two years for employees starting employment on or after 6th April 2012, however if the redundancy dismissal was due to asserting a statutory right eg. requesting flexible working, then no fixed length of service is required.

Redundancy Procedure

A formal redundancy procedure should be negotiated and agreed with trade union or employee representatives. Full consultation will do much to allay unjustified fears, avoid the suspicion that redundancies are imminent and allow representatives to contribute their views and ideas.

Depending on the size and nature of the company, the contents of a formal procedure on redundancy would normally contain the following elements:

  • an introductory statement of intent towards maintaining job security, wherever practicable
  • details of the arrangements with any trade union or employee representatives
  • the measures for minimising or avoiding compulsory redundancies
  • general guidance on the selection criteria to be used where redundancy is unavoidable
  • details of the severance terms
  • details of any relocation expenses, details of any hardship or appeals procedures and
  • the policy on helping redundant employees obtain training or search for alternative work.

Selecting employees for redundancy

Employers should consult affected employees over this issue. They should try wherever possible to use objective criteria, precisely defined and capable of being applied in an independent way, when selecting employees for redundancy. This is to ensure that they are not selected unfairly.

The chosen criteria must be consistently applied and be objective, fair and consistent. Basing any selection on skills or qualification will help to keep a balanced workforce appropriate to the organisation's future needs. Employers should also establish an appeals procedure.

Examples of such criteria:

  • attendance record (you should ensure this is fully accurate and that reasons for and extent of absence are known)
  • disciplinary record (you should ensure this is fully accurate)
  • skills or experience
  • standard of work performance
  • aptitude for work

Formal qualifications and advance skills should be considered, but not in isolation.

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