Some Facts About Redundancy

In the present economic climate employers and employees may find themselves in the position where redundancy is being seriously considered. It is worth bearing in mind some do’s and don’t’s.

Even if there is a genuine redundancy in accordance with the legal definition, a redundancy dismissal can still amount to an unfair dismissal in the eyes of the law. This in turn makes the employer liable to pay the employee compensation above and beyond the normal redundancy payment to include a compensatory award for continuing loss of earnings and some other expenses.

The employer must follow the procedures laid down by law or risk a finding of unfair dismissal for procedural irregularities. There are special rules about redundancies of more than 20 employees. Even under that level of dismissals an employer must always ensure that:-

  • The employee(s) is given the earliest possible warning of a risk of redundancy.
  • The employer must adopt a fair means of selection for redundancy. That procedure must be transparent, i.e. easy to follow and fair.
  • There must be a genuine consultation
  • The employer must write to the employee to say that it proposes to dismiss the employee by reason of redundancy and arrange a meeting to discuss this. Following the employer’s decision the employee has the right to appeal.

The consultation process should include an exploration of alternatives to redundancy such as short-time/part-time working or moving to another post.

If the employee is entitled to a redundancy payment then that is set out on a scale laid down by law. An employee must have worked for an employer for two years before entitlement arises and a claim to an Employment Tribunal must (usually) be brought within six months of the termination date of the employment.

Employers and employees may make alternative arrangements for termination of an employment contract even where there is a redundancy. This usually (although this is not obligatory) involves a payment by an employer to an employee on termination of the dismissal of an amount higher than the minimum redundancy entitlement. An employee must receive independent legal advice from a solicitor or other qualified legal adviser before signing and being bound by a Compromise Agreement.

Taking legal advice at the earliest possible moment can save employers a great deal of time and money. Employees can sometimes also find that they are entitled to more than they are expecting.

By Chris Brown

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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