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Redundancy Process Guidelines for Employers

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Calendar November 27, 2020

The importance of a fair redundancy process cannot be overlooked by employers. A genuine redundancy can still lead to a claim for unfair dismissal if the process is flawed. Employees who would not normally be entitled to a redundancy payment due to their length of service may also be eligible to bring an employment tribunal claim for discrimination if the redundancy process is discriminatory. Therefore, it is crucial that employers carry out a fair redundancy process to avoid the cost and reputational damage caused by employment tribunal claims.
KLG Law offers bespoke employment law services for employers, and can assist you in the redundancy process. Read on to understand the process of redundancy for employers to follow.

How do you manage redundancies?

Employers should communicate and consult with employees throughout the redundancy process to keep them informed of the redundancy situation. Redundancy will inevitably have a huge impact on the employee and their personal life, so providing them with advanced warning will allow the employee to get their affairs in order. It will also open the channel for communication at an early stage, where the employee may provide useful suggestions for alternatives to redundancy.
Any employee at risk of redundancy should be provided with warning that they are at risk of redundancy as early as possible. This notice should be provided in a formal letter explaining the redundancy situation and providing key details. We have drafted a sample letter below for employers to consider.

Once the employee is aware of the redundancy situation, you should arrange a consultation meeting to discuss the redundancy at more length.
What are the fair reasons for redundancy?

The fair reasons for redundancy can be found at section 139 of the Employment Rights Act 1996. They can be summarised into three different reasons:
1. Closing the business
The employer has ceased or intends to cease carrying on the business for the purposes of which the employee was employed.
2. Change in place of work
The employer has ceased or intends to cease carrying on the business in the place of work where the employee was employed.
3. Reduction in work

The requirements of the business for the employee to carry our work of that particular kind has ceased or diminished or are expected to cease or diminish. This also includes where work at a particular place where the employee was employed has ceased or diminished or are expected to cease or diminish.

Other reasons for redundancy that do not fit into one of the above three reasons would be unfair and could lead to a claim for unfair dismissal. For example, making an employee redundant because you wanted to hire a replacement would be unfair.

What to include in a redundancy letter

In the letter notifying the employee that they are at risk of redundancy you should include:
An explanation of why redundancies are being made by the employer;
The number of roles that are being made redundant and the selection pool they are being selected from;
The selection criteria (if identified at this stage);
Confirmation that a decision has not been made yet and the employer is open to considering alternatives to redundancy; and
Details of the next steps in the redundancy procedure (e.g. consultation meeting).
We have prepared a template letter for employers to consider when preparing a letter informing employees that they are at risk of redundancy.

Redundancy consultation process

It is a legal requirement to consult with employees before a decision is made on whether they are being made redundant. The consultation process differs depending on the number of employees at risk of redundancy. Contact us for further guidance if there are over 20 employees at risk.
Most employers will fulfil this legal obligation by inviting the employee to a redundancy consultation meeting. The meeting minutes will be recorded and the employee can be accompanied at this meeting by a trade union representative or a colleague.
The redundancy consultation meeting will provide a forum for you to discuss the redundancy with the employee and provide more information regarding the redundancy process such as: the selection pool, the selection criteria and alternatives to redundancy.

Contact us

It is always advisable to obtain legal advice before starting a redundancy process and making staff redundant to reduce the risk of any claims in the employment tribunal.
For bespoke redundancy advice for employers and more information on the redundancy process in the UK, please contact our team of employment law specialists on 0330 221 0684 or contact our legal team online.

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