There are certain rights that an employer will have to follow to ensure that the redundancy is conducted in a fair and informative way.
Redundancy payment claims will only relate to employees with more than 2 years of continuous service.
There are three ways a Company can make employee redundant. A valid redundancy to end an individuals’ employment will need to be due to one of the following:
Place of work redundancy relates to a relocation situation.
Meaning, the businesses is no longer operating in the usual place of work.
An employee’s place of work will either be a single location because they have never worked for the Company elsewhere.
This will be the case regardless of any mobility clauses in the contract.
Alternatively, if they have worked in various business premises/locations, it will need to be based on fact.
This will be determined by looking at the terms in the contract of employment.
A job redundancy applies to situations where employees are made redundant because the job no longer exists in the business.
This is usually because of a change in business strategy, or the company no longer exists.
Employee redundancy relates to there being a surplus of workers in the business for a specific, role, and the business needs to reduce their headcount.
Very often, this is the basis of a ‘sham-redundancy’, whereby an employee is made redundant because they are no longer needed, but then another individual is employed to carry out the same duties.
In the interest of doubt, a ‘sham-redundancy’ could leave an employer exposed to a costly employment tribunal claim.
A small business owner may be tempted to handle redundancy situations informally.
However, it is advisable to follow a formal process to ensure that steps are not missed or mishandled as this could expose your company to a redundancy claim.
Your company will benefit from the following;
By following a formal procedure, the process is more likely to run smoothly.
It will also benefit the employees with any uncertainties they may have.
If you are looking to make an employee redundant, you should make your employee aware of the following;
The criteria will need to be fair and will have to be applied to all employees.
Redundancy decisions cannot be made based on any protected characteristic stated in the Equality Act 2010, for example, age or disability. It also cannot be based on ‘last in first out’ scenario.
Criteria Examples:
If the company is making employees redundant, it is necessary to have a consultation period to discuss the reasons for redundancy and the alternatives.
If the number of employees is 20 or more, there are rules relating to the time-period for collective redundancies.
While there are no specific time limits for how long the consultation period between employee/representatives should last, the number of redundancies determines the minimum time-period required:
Employers must consult with the appropriate representatives who will be affected by the redundancy process.
Failure to consult members of staff may lead to a claim against the company.
If the redundancy is due to no longer needing certain employees or place of work has changed, another position may need to be offered.
While the alternative offer does not need to be an identical it does have to be valid and a reasonable equivalent to the old job when comparing the pay, status, and hours etc.
Even if the employee has accepted the offer, there is still a trial period.
Therefore, within 4 weeks they are entitled to try a new position and then hand in their notice.
The fact that the individual has engaged in a trial period will strengthen their claim that the new offer was not suitable and are entitled to a redundancy payment.
The statutory minimum redundancy pay is based on an employee’s age during their employment against their gross weekly wage amount.
The company can pay an individual more than this amount, but if it is less than the statutory minimum an ex-employee could potentially bring a claim against the company.