Redundancy – Keeping It Legal

The economy is said to be improving after several years of doom and gloom. Sometimes though, redundancy still raises its head. In such situations it is, of course, important for the procedure to be carried out within the law. Employment law solicitor, Christopher Brown, from AMD Solicitors outlines some important points for all who may become involved.

Voluntary Redundancies

Some employers are able to arrange for voluntary redundancies or early retirement where employees are willing to agree to such arrangements. It is vital to remember that any voluntary process must be just that – without compulsion or targeting of certain employees.

Compulsory Redundancies

The legal definition of redundancy is that the work for which the employee (this term excludes self-employed workers or true volunteers) was employed has or will diminish or disappear at the location where the employee usually works.

Employers need to ensure they avoid accusations of unfair selection for redundancy and/or discrimination. Established procedures are needed to avoid a situation where an employee is unfairly dismissed. Unfair dismissal or discrimination claims can result in compensation claims which are for much greater sums than simple redundancy payments.

Whilst the technicalities of the procedures for redundancies are beyond the scope of this article an employer must ensure:

(a)        The employee(s) is/are given early warning of any risk of redundancy.

(b)        A fair selection process. This often but not always involves listing the strengths and weaknesses of employees by a point scoring method. Procedure must be easy to follow and fair.

Acceptable criteria include:

  • Skills, qualifications and competence of employees
  • Quality of work and general performance
  • Disciplinary record
  • Attendance

Length of service – can sometimes be used as a factor, i.e. “last in, first out”, but this should not be the only reason for redundancy selection, otherwise there are risks of discrimination including age discrimination.

Reasons you cannot use for redundancies include employees being on part time or fixed term contracts or any of a person’s characteristics covered by discrimination law e.g. age, race, sex, pregnancy or disability.

(c)        Genuine consultation between the employer and employee or employee’s representatives as part of the decision making procedure.

(d)        Notify the redundancy proposal in respect of the employee, hold a meeting, and also give a right of appeal.

Alternative Employment

Part of the consultation procedures should include discussions about alternatives to redundancy.

These could include:

  • Moving to another post.
  • Part time working.
  • Short time working.

Some alternative work is quite a long way from the previous place of work, and employees may rightly be reluctant to move if they are settled in an area and have family commitments.

Redundancy Pay

To qualify for redundancy pay employees must:

  • Have a contract of employment with an employer.
  • Must have worked for at least 2 years continuously for the same employer.
  • The employee must have been dismissed or, in certain circumstances, put on to short time working or laid off. Some of the rules about this aspect of redundancy are rather technical.

The amount of redundancy payment which an employee can claim from an employer depends on his/her age and number of years’ continuous employment. Use the Government’s redundancy pay calculator to determine the exact payment.

If an employer is in a position where it cannot pay redundancy or other money due to an employee, the Government’s Redundancy Payments Office will pay certain amounts of redundancy and other money due to employees who find themselves in this situation.

If an employee is redundant he/she is still entitled to proper notice either under law, or according to his or her contract of employment.

Settlement Agreements

Employers and employees sometimes make alternative arrangements for the termination of an employment contract whether there is a redundancy or an employee is going to leave for some other reason. These arrangements used to be called Compromise Agreements. From 29th July 2013 these have been re-named as “Settlement Agreements”. In those circumstances the agreement must be in writing and the employee must receive independent legal advice from a solicitor or other qualified legal advisor who can satisfy the conditions as well, before signing the agreement.

The best way employers and employees can protect themselves against arrangements going wrong, or claims or wrongdoing, is to take appropriate legal advice at a very early stage. It is also important for employers to involve employees in the process as much as possible. It should also be remembered that there are special rules about redundancies involving more than 20 employees.

CHRISTOPHER BROWN is one of AMD’s employment law solicitors in Bristol – to get in touch please send him an email or telephone 0117 923 5562.

This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.

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