How to Handle Staff Redundancies
The question of whether or not to implement staff redundancies can be a difficult and daunting decision to make, but one which is occasionally necessary to help ensure the longevity of your business. Many businesses have found themselves impacted by COVID-19 and the national lockdown in recent months, and as a result we are now seeing an increase in the number of redundancies being made across all sectors nationwide.
Redundancy is a rather complex area of employment law, and as such it is important to familiarise yourself with the ins and outs of the full process before making any decisions.
What is a fair redundancy process?
When it comes to successfully handling staff redundancies, ensuring fairness in your approach is key.
A fair redundancy process will involve:
- Considering alternative employment options
- Providing adequate warning to all employees that redundancies are going to be made within the business
- Creating a fair, non-discriminatory set of scoring criteria
- Keeping your employees up to date throughout the process
When is it appropriate to make a member of staff redundant?
Business owners will often consider redundancy if the company plans to downsize, including if a certain area of the company is due to close completely, or if the demand in any one area or across the board has been steadily decreasing, resulting in less work being available for the employees in any particular/all department(s).
It’s important to remember that redundancy should not be used as an alternative for dismissal. If an employee’s performance is lacking, if they have a poor record of attendance, or if they have committed misconduct, employers should seek to handle the dismissal in according with the particular procedures outlined in the Employee Handbook, and not approach the situation as though it were a redundancy.
The dedicated HR/Employment Law team at DRN are on hand to provide further guidance. Please contact the team on 01282 433241 with any questions or queries.
Unfair redundancy selection criteria
It would be deemed discriminatory if an employer should select an employee for redundancy based on any of the following reasons:
- Pregnancy, including any reasons relating to maternity
- Family, including parental or paternity leave, adoption leave or time off for dependents
- Acting as an employee representative
- Acting as a trade union representative
- Joining or not joining a trade union
- Being a part-time or fixed-term employee
- Age, disability, gender reassignment, marriage or civil partnership, race, religion or belief, sex or sexual orientation
- Pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage
Is redundancy the best/only option?
Redundancy should always be the last resort. As redundancies are issued due to a need for the company to reduce its costs, business owners are advised to explore all other options before initiating redundancy measures. This may include restricting overtime, imposing a recruitment freeze, or temporarily withdrawing non-contractual benefits.
You may also wish to seek advice on the Coronavirus Job Retention Scheme which was implemented by the Government upon the outbreak of COVID-19 and may offer some additional support so that you can avoid any job losses.
Employee consultation is a vital part of the fair redundancy process. Failing to consult your employees in a redundancy situation will most likely mean any redundancies you make will be deemed unfair, which could lead to involvement in an employment tribunal.
Whilst there are no specific consultation rules in place for a small-scale redundancy process, it is good practice to fully consult all of your employees if you intend to make redundancies in your business, as if you don’t, an employment tribunal could decide that you’ve dismissed your staff unfairly.
When making 20 or more redundancies within a 90-day period, you will need to follow ‘collective consultation’ rules, which are as follows:
- You’ll need to notify the Redundancy Payments Service (RPS) before consultation begins. The deadline for this will depend on the number of redundancies you intend to make.
- You will also need to consult with any trade union representatives or elected employee representatives. If there are none, you will need to consult with staff directly.
- At this stage, you’ll need to provide all necessary information to representatives or staff about the planned redundancies, and you will need to allow enough time for the information to be thoroughly digested and considered.
- You must respond to any requests for further information within a timely manner.
- Once the information has been considered by representatives or staff, you may then issue termination notices to the affected staff, informing them of an agreed leaving date.
- Redundancy notices may be issued once the consultation process is complete.
Whilst there is no time limit on how long consultations may last, a minimum period is in place:
- For 20 to 99 proposed redundancies, you must complete a minimum consultation period of 30 days before dismissal can be issued
- For 100 or more proposed redundancies, you must complete a minimum consultation period of 45 days before dismissal can be issued
Statutory redundancy pay – what you need to know
An employee will be eligible for statutory redundancy pay if they have worked under a contract of employment for at least two years.
The amount they are entitled to will be dependent upon the employee’s age and the length of time they have worked within the company. As it currently stands, employees who have been made redundant are entitled to receive:
- half a week’s pay for each full year of employment (if below the age of 22)
- a week’s pay for each full year of employment (if aged between 22 and 40)
- 5 weeks’ pay for each full year of employment (if aged 41 or above)
This entitlement is currently capped at £538 per week, with a maximum length of service being 20 years. This means the maximum amount of statutory redundancy pay an employee can receive is £16,140, although the law allows employees to give staff extra redundancy pay if they so wish.
Key things to remember
The decision of whether or not to initiate redundancy measures should not be taken lightly, and there are a number of key things to remember when it comes to handling staff redundancies fairly:
- There are different procedures in place for those needing to make small-scale redundancies as opposed to collective redundancies (20 redundancies or more in a 90-day period)
- Any employee who will have two years of service within the company by their termination date, and who is working their notice for redundancy, is entitled to reasonable time off work to look for another job.
Looking for further advice?
Being a complex area of employment law, redundancy can be a stressful and confusing time for all involved. Contact our team of HR and employment law specialists today for professional support, advice and guidance on how to carry out a fair redundancy process, and eliminate the risk of any claims arising due to mishandled procedures.