August 10, 2018

Should Companies Have a redundancy policy?

It is advised that all companies should have a redundancy policy in place.

Being able to refer to a policy on the redundancy procedure can be a useful tool to ensure that the process is fair and not discriminatory. 

It is important that Employers are aware of the correct consultation periods that are applicable, depending upon the scale of the redundancy. 

Employers must start consultations before giving employees notice of dismissal. They must be mindful of the fact that the consultation process must be meaningful; representatives must have enough time to consider the proposals being put to them.

What Is Included In A Redundancy Policy?

The policy itself should outline the key steps in the redundancy process that should be followed.

Within the redundancy policy, it may be useful to outline what information needs to be disclosed to the employees appointed representatives. The following information should be disclosed in writing to the employee's appointed representatives:

  • Reason for the proposed redundancies;
  • The total number of employees at that workplace, and the number of employees to be made redundant;
  • The proposed method of carrying out the redundancies;
  • The proposed method of calculating any redundancy payments;
  • Any agency workers working temporarily under the direction of the employer, and the type of work they are carrying out;
  • The parts of the employers business where the agency workers are working.

Resources to help your business

Redundancy Policy Template

redundancy selection matrix

The policy should emphasise that the redundancy selection criteria must be applied fairly and consistently to all employees. The criteria itself must be objective. The policy may give examples of criteria that may be used, such as:

  • Disciplinary record;
  • Attendance record;
  • Standard of work performance;
  • Skills and experience;
  • Aptitude for work;

The same criteria may not be applicable for every redundancy. Therefore each situation must be individually assessed. Using the same matrix every time may directly or indirectly discriminate against certain employees.

Resources to help your business

Redundancy Checklist and Procedure Guide

Ensuring The Dismissal Is Fair

The policy should also stress the importance of ensuring that the Company should always act reasonably and fairly in redundancy to avoid an employee bringing a claim for unfair dismissal. The policy should explain that a dismissal will be automatically unfair if:

  • An employee is selected for redundancy for an inadmissible reason;
  • Insufficient attempts were made to find suitable alternative employment;
  • The company has failed to consult the relevant trade unions;
  • The selection criterion has been improperly applied.

Employers should also give employees the right to appeal against a redundancy decision if they wish to, and the appeal process should be clearly explained to them.

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About the author 

James Rowland

James is the Commercial Director at Neathouse Partners and regularly writes articles surrounding issues in HR & Employment Law. Outside of the office, James is a keen Cricketer, playing in the Cheshire League for Nantwich CC. He also loves going to watch his football team, Crewe Alexandra. Feel free to connect with James on LinkedIn.

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