Making an employee redundant can be a daunting job. It is important to follow the correct procedure to ensure that a worker cannot subsequently claim unfair dismissal.
Legal and commercial expertise
At Goodwyn Herrera, we can advise you throughout the process of making an employee redundant. We have experience in employment law in a range of sectors and we will focus on your commercial objectives as well as your legal requirements.
We will work with you from the start to ensure that you have a legitimate reason for the redundancy, that the correct procedure is implemented and that you fulfil all of your legal obligations.
As well as providing legal expertise, we will always make sure that you have excellent service and that we are available to speak to you to discuss the situation and answer any questions you may have.
Fair redundancy process
It is essential that you are able to demonstrate that a fair redundancy process was followed from the start. There are a number of steps that you must go through.
Consider whether there are any alternatives to redundancy
Initially, you will need to consider whether there are any alternatives to redundancy, such as moving staff or retraining them.
There must also be a genuine reason for redundancy, such as closure of the business or part of the business or a reduction in the need for workers.
Establish a pool of employees at risk of redundancy
You will then need to establish a pool of employees who do the same work as that which is no longer required or whose jobs are interchangeable, unless the job in question is unique.
It is important to ensure that you do not inadvertently discriminate against any group when selecting your pool. For example, by choosing part-time workers, you may be discriminating against female employees if most of your part-time workers are women.
As an employer, you are then required to consult with all of the employees in the pool. If 20 or more jobs are being lost, then you should follow the collective redundancy procedure and hold a group consultation. Where fewer than 20 jobs are going, you should consult with everyone individually to set out your proposals and explain how you will be choosing those to be made redundant.
Redundancy selection criteria
In deciding which employees to choose from your pool, you must be able to demonstrate that your selection was fair and impartial. This is generally done by putting a redundancy selection matrix in place, where workers are scored in various areas such as performance, qualifications, skills, knowledge, attendance and disciplinary record.
An employee would usually be rated in each area on a scale of 0-5 by at least two managers. By doing this, you will be able to demonstrate to an employment tribunal that your selection was open and just.
Statutory redundancy pay
If your redundant employee has worked for your business continuously for two years, they are entitled to statutory redundancy pay. This is based on age, length of service and rate of pay and is calculated as follows:
For each full year worked:
Up to age 22 – half a week’s pay
Age 22 to 40 – 1 week’s pay
Age 41 plus – 1.5 weeks’ pay
This is capped at £538 per week and for a maximum of 20 years’ service.
It is open to you to ask for volunteers for redundancy. You should send a letter asking for volunteers to all of those within your selection pool. Again, you must choose fairly from those who step forward. If you decline someone’s request, you must be able to show that you did this for a valid reason, for example, where they are critical to your business.
Those taking voluntary redundancy should usually sign a settlement agreement agreeing not to bring any legal claim against you or your organisation and undertaking to keep both the terms of the agreement and your business affairs confidential. It is customary to provide a higher payment in return for this. By law, they must take independent legal advice before signing the document as it is a waiver of their rights.
Redundancy is a complex area with a considerable number of rules to adhere to. It is always advisable to seek legal advice to ensure that you have a fair process in place so that you can avoid claims of unfair dismissal further down the line.
At Goodwyn Herrera we are experienced in providing redundancy advice to businesses. If you are considering making redundancies and you would like to discuss your options with an expert employment solicitor, call us on 020 8187 6495 or email us at email@example.com to make a free no-obligation enquiry.