What Constitutes a Redundancy?22 February 2018
If a business is considering making staff redundant, it needs to be for specific reasons and has to follow some basic ground rules set out in the Employment Relations Act 1996. Redundancy can happen for a variety of reasons:
- The business might be changing the way it operates which means they no longer need staff to perform certain roles.
- It could follow after a period of change, for example, the introduction of new machinery in a factory or new software in an office environment.
- The business may be moving location or might have decided to shut down altogether.
A redundancy applies when the employee’s job no longer exists, including when a particular task needs fewer employees to carry it out. A business cannot make someone redundant and then hire another person to do the exact same job, that is not an applicable redundancy.
Employees have certain rights when it comes to this form of employment termination which includes being given redundancy pay. All employees facing redundancy must be given a notice period and have enough time to look for a new job or retrain.
There are two types of redundancy:
Non-Compulsory Redundancy: This happens when the business asks individuals if they would like to volunteer for redundancy. This is often used in circumstances where major changes in the operational procedure have taken place and gives people the opportunity to apply to be considered. It does not mean they will be guaranteed redundancy and the selection process must be open and fair.
Compulsory Redundancy: While businesses will generally look for voluntary redundancies in the first instance, it may be the case that compulsory redundancy has to be employed. In these instances, the employer needs to ensure that the whole process is carried out fairly and that employees are not unfairly discriminated against. Compulsory redundancy also occurs, unfortunately, when a company has fallen into difficulties and may even stop trading.
The employer must be careful about the criteria they set out for compulsory redundancy as some of these can be discriminatory. For example, someone on maternity or family leave cannot be pushed to the front of the queue because they’ve taken time off. Neither can employers discriminate against someone based on the sex, disability, age, marriage, religion or belief among other criteria.
The Importance of a Consultation
Employees must always be consulted if a business is taking measures to reduce staffing levels via redundancy measures. If a consultation period is not carried out, anyone made redundant will have been considered as dismissed unfairly and may have cause to make a claim against the business.
If the business is planning to make more than 20 staff members redundant, they must follow a process which is known as collective consultation which includes certain important steps that need to be followed. If the number of staff is below 20, it is still a good idea to follow these guidelines to avoid any issue with claims for unfair dismissal in the future.
Staff Notice and Redundancy Payment
After the initial consultation phase and once individuals have been selected for redundancy, they must also be give reasonable notice for when they are to leave. This should be within the statutory period for the amount of time they have already worked.
Certain employees may be eligible for statutory redundancy payment dependent on their length of service. While businesses that are changing practice or moving location should be able to comply with this, it can be more difficult for those that are facing financial difficulties and are making redundancies because of solvency issues. Businesses may be able to get help from the Insolvency Service’s Redundancy Payments Office if this is the case.
Considering making redundancies? Get it solved! Solved hr are well versed in redundancy procedures and will ensure the process runs as smoothly as possible. Call us on 07714 790024 or email firstname.lastname@example.org to arrange an initial, no obligation, confidential chat.