Whilst nothing in life is absolutely guaranteed, the same can be said for businesses. As such, there are times when economic difficulties can lead to businesses having to make difficult decisions in respect of their work force. It can lead to interim processes such as lay off all short time working or more permanent processes such as redundancy. If you have been affected by any of these issues, we have an experienced team who can provide robust and commercial advice in this respect.
What is redundancy?
Redundancies can occur in three ways:
- Where your business closes in its entirety.
- Where your place of work closes – this can be one site or numerous sites.
- The business requires less people to carry out work of a particular nature.
Selection for redundancy
If your employer is looking to make savings in relation to its business, you will need to make a decision as to which employees are at risk, in which departments etc. If the employer is removing an entire class of employee, or employees who carry out unique roles, this is classed as a self-selecting redundancy. If, however, an employer is simply reducing the number of employees who carry out a particular role, then they will need to carry out a selection process. This involves pooling employees who carry out the same or broadly similar work and scoring them against objective criteria. Each employee would then be given a particular score and those normally with the lowest scores are then provisionally selected for redundancy. You have the right to inspect the criteria and your score and make comments about both, if you feel that these are subjective and/or unfair. Be aware that employers should no longer operate the concept of “last in first out”, neither can they discriminate in the selection of employees for redundancy.
Once your employer makes a decision to implement a redundancy exercise, they have a duty to consult with you as the employee. If they are proposing to dismiss up to twenty employees for redundancy, they can simply consult with employees on an individual basis. These consultation meetings should normally give you the right to be accompanied and will talk about the rationale behind the redundancy, any selection process involved, any alternatives to redundancies should be proposed redundancies go ahead, and whether there is any suitable alternative role that might avoid or mitigate any redundancies.
If the employer is proposing to dismiss twenty or more employees as redundant (but less than one hundred), then your employer would be obliged to collectively consult. This means consulting with both you as the individual employee but also with any recognised trade union and/or elected employee representatives. However, the same points are discussed during collective consultation meetings as they are with individual consultation meetings.
Consultation should be meaningful necessarily with a view to agreement, however, this is your opportunity to ask as many questions as you need to make sure that you understand the rationale for the redundancy.
As part of any fair redundancy process, an employer is under a duty to make you aware of any suitable alternative roles which could avoid or mitigate your redundancy. Whether a role is suitable is down to you as the employee, and this is a subjective you. That said, if you unreasonably refuse an offer of a suitable alternative, then the employer can reasonably withhold your statutory redundancy payment. Therefore if you find yourself in this situation, it is preferable to take legal advice prior to making any decisions as this could forfeit a considerable sum of money.
How do you calculate a statutory redundancy payment?
In order to qualify for a statutory redundancy payment you require a minimum of two years’ qualifying service, but if you are able to meet this criteria, then you are entitled to a statutory redundancy payment which is worked out on the basis of your age, lengthy of service and gross weekly pay (currently capped at £538 per week). It may well be that your employer also enhances your redundancy payment, however, there is no automatic requirement that they do so, and if they did it would probably be in return for you entering into a settlement agreement in order to waive your rights to sue the company in any way.
You would also be entitled to your notice pay and pay in lieu of any accrued but untaken holiday.