Redundancy can be a difficult experience for both employers and employees alike. However, understanding and following a correct redundancy procedure can ensure that the process is fair and transparent. It’s important for an employer to remember that the treatment of employees at risk of redundancy has impact on not only those at risk, but those who are aware of what may be impacting their colleagues.

In this blog, we’ll explore how to manage a redundancy successfully and how best to navigate the process fairly.

Redundancy

What is redundancy? Redundancy arises when an employer needs to reduce its workforce. In the UK, an employee is dismissed for redundancy if:

• The employer has ceased, or intends to cease, continuing the business, or
• the requirements for employees to perform work of a specific type, or to conduct it at the location in which they are employed, has ceased or diminished, or is expected to do so.

Importantly it is worth remembering that it is the job roles that is redundant and not the individual performing the role. Therefore, this process would not be suitable to handle misconduct or performance related concerns.

As part of the redundancy process employers must follow the correct procedure, employers should:

• Take all reasonable steps to avoid redundancies.
• Follow a clear and fair redundancy process and consider adopting a formal redundancy policy.
• Manage redundancies legally and in a way that minimises the impact on both those who lose their jobs and those that remain employed.

What are the legal requirements?

Redundancy regulations can be complicated, and we would advise you to seek advice when redundancies are being considered, failure to follow the correct procedure could mean that an employer may face an unfair dismissal claim.

In our recent blog Extended protection from redundancy for pregnant employee’s and those on family leave, we outlined changes that have been implemented with regards to redundancy protecting those who are pregnant or on family leave, please read this blog for further details. 

Consultation: Employers must consult with employees before making any redundancies.

Although there’s no minimum statutory consultation time period for fewer than 20 employees at risk of redundancy, consultation must be meaningful. An employee is entitled to be accompanied at all individual consultation meetings by a trade union representative or colleague.

If 20 or more employees at one establishment are to be made redundant, collective consultations with recognised trade unions or elected representatives must start within the below minimum time scales:

• Between 20 to 99 redundancies – the consultation must start at least 30 days before any dismissals take effect
• 100 or more redundancies – the consultation must start at least 45 days before any dismissals take effect

If you are making 20 or more employees redundant at the same time, the consultation should take place between you as the employer and an employee representative either a Trade Union Representative or an elected employee rep.

Collective consultations must cover:

• Ways to avoid redundancies.
• Reasons for redundancies.
• How to minimise the number of dismissals.
• How to limit the effects on employees, such as through retraining.

Selection Criteria: Employers should use fair and objective criteria to select employees for redundancy. Criteria might include skills, performance, attendance, and disciplinary records.

Notice Period: Employees are entitled to a notice period before their employment ends. The length of this period depends on how long they have been with the company and what is written within the employment contract.

Appeal: Whilst there is no legal requirement to give an employee the right to appeal the decision made, it is advisable and best practice to give the employee the right to appeal the decision to make them redundant to avoid any further legal complications.

Redundancy Pay

Employees with at least two years of continuous service are entitled to statutory redundancy pay. The amount depends on their age, length of service, and weekly pay (capped at a maximum amount set by the government).

Length of service is capped at 20 years’ service and pay is capped at £700 per week; statutory redundancy pay is calculated as below:

• half a week’s pay for each full year you were under 22
• one week’s pay for each full year you were 22 or older, but under 41
• one and half week’s pay for each full year you were 41 or older

The weekly pay amount is the average you earned per week over the 12 weeks before the day you received your redundancy notice.

The Psychological Contract

The unspoken but fundamental psychological contract between employer and employee establishes a mutual expectation of psychological safety and loyalty.

Being in breach of this contract can prove critical to the employment relationship. A fundamental breach to the psychological contract of announcing redundancies in any organisation can impact employees greatly and can even force them to take flight and leave the organisation as they feel that they have lost trust in the organisation.

The emotional effect on redundancies is huge and can cause a bigger impact than the redundancies themselves, employees may be angry, in denial, shock and some may even feel relief as it may be a positive change for them.

Providing support can ease the process for employees:

• Offer Outplacement Services: Help with job searching, CV writing, and interview preparation.

• Provide References: A positive reference can assist employees in finding new employment quickly and with ease.

• Emotional Support: Consider counselling services with an Employee Assistance Programme or support groups to help employees cope with the emotional impact of redundancy.

Managing redundancy is a sensitive and complex task; following the steps highlighted above, being transparent, and offering support, employers can handle redundancies with care and respect, minimising the negative impact on employees and the organisation as a whole.

Please contact ViewHR if you would like a discussion around how to implement a redundancy process and find out how we could support you and the team.