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Making UK Employees Redundant
What is Redundancy? | Redundancy Notice Periods
| Grounds for Unfair Dismissal | Statutory Redundancy Payments
| Alternatives to Redundancy
 
Introduction - unfortunately,
thousands of UK small businesses are making staff redundant, in order to reduce
staff overheads, in the face of recessionary pressures. Employers are
reacting quickly to doom and gloom newspaper headlines, by reducing payroll
costs. However, employers should seek the latest legal advice (as
statutes and case law changes over time), and think very carefully before making
anybody redundant. This article summarises the practical and legal principles
of redundancy and other processes that reduce headcount
expenditure.
What is Employment Redundancy? -
The phrase
redundancy means that the job ceases to exist, causing a member of staff to
leave the business. Redundancy concerns the business need for a job role, not
the relative success or failure of an individual working in that particular
role. Redundancy can be devastating for workforce morale - not least for
individuals unexpectedly finding themselves back in the job market. It
creates uncertainty amongst the remaining members of the team, in which the
redundant person worked. Making an employee redundant also wastes the
business investment in recruiting and training that individual in the first
place. In difficult economic times, employees can protect themselves by
taking out redundancy insurance, in the form of income protection plans.
From a business perspective, redundancy is a
reasonable ground for dismissing employees, as long as it is done using the
statutory procedures, in a fair and non-discriminatory way. Failure to
make an employee redundant without following the proper procedure may result in
a employee claiming unfair dismissal at an employment tribunal. As an
employer, you must be able to prove that either:-
* In situations where organisations are using technology to replace humans,
it is more complicated deciding which jobs need to be made redundant. To be fair
during the process, the organisation must have (or plan too):-
-
Cease activities upon which
the job is designed to support;
- Discontinue use of the physical location where that job is based;
- No longer require the employee to do that type of work. In other words, the job itself must become redundant and not the employee.
Technology is replacing human jobs in industry
sectors such as manufacturing, construction and information technology.
Domestic workers are suffering as cheaper foreign labour and jobs being
'off-shored', lead to company wide cutbacks. In these situations, there are various methods in deciding who
should lose their job, in situations where across-the-board cuts need to be
made. Firstly, traditional workplaces have used a ' last in, first out'
principle, to provide clarity and supposed that fairness. Secondly, employers may
request for voluntary redundancies, (which may be attractive to some older
workers nearer retirement age, seeking a nice payout settlement). If
traditionally there has been a usual 'custom and practice', non discriminatory
method for selecting employees, it is sensible to stick to that arrangement.
Trade union organisations who may represent the rights of workers, will also need to be
consulted throughout the process, and any disputes potentially mediated by the Advisory,
Conciliation and Arbitration Service (ACAS).
If an alternative job exists elsewhere in the business, as an employer,
you must consider whether the employee being made redundant, could do the
alternative job
instead. If the employee agrees to undertake the alternative job, (which
may be based on alternative terms and conditions), a four-week trial period must be
offered. After the trial, if the employee refuses to accept the alternative,
then it is possible grounds for dismissal without paying redundancy. Always seek
professional legal advice to clarify each individual situation to see what is
'reasonable' and lawful.
Redundancy Notice Periods
- to avoid being
sued for wrongful dismissal, proper notice periods should be provided to the
employees you plan to make redundant. The length of the notice
period depends upon the amount of time they have worked within an organisation,
their age, and and any conditions in their employment contract. During the notice proved, the employee
is entitled to reasonable time off in order to search for a new job, by visiting recruitment agencies or going to a job interview.
The statutory redundancy notice periods are as follows:-
- at least one week’s notice if the employee has been employed between one month and
two years;
- one week’s notice for each year if employed between two and 12 years;
- 12 weeks’ notice if employed for 12 years or more.
If a larger
group of staff are to be dismissed,
collective redundancy rules may apply. Employers must undertake group
collective consultation before individual notification takes place. Written
notification and face to face meetings with trade union officials or elected
officials, must be undertaken to explain the situation. These discussions
should include agreement on options to potentially avoid the dismissals in the
first place, or at least ways to possibly reduce the planned number of
redundancies, and their impact. The notice periods are set out in law as
follows; where 20 or more employees are planned to be dismissed, employers must
provide 30 days before the day of the first redundancy, and least 90 days
before where 100 or more to be dismissed.
Grounds for Unfair Dismissal - the law protects workers employment rights
by providing protection against a dismissal in certain circumstances. If a
worker is dismissed under such circumstances, a claim for an unfair dismissal
may be brought by the employee against the employer. It is unfair to make
an employee redundant because:-
-
of Discriminatory factors such as age, race, sex, disability, religion or sexual
orientation.
Likewise, by changing the 'flexible' terms and conditions of the employees
employment contract, (to reduce pay or working hours), it may constitute
constructive dismissal. This can only be achieved with express written
agreement of the employee.
Failure to achieve this may result in a claim for unfair dismissal.
Statutory Redundancy Payments - employees who are going to be made redundant
and have had at least two years of 'continuous' service, are entitled to a
Statutory Redundancy Payment. This statutory payment is calculated based on the age of the
employee, their age and years of service. The rate an employer is obliged to
pay, changes annually according to changes in UK employment law.
There are some exceptions and exclusions to this statutory entitlement. As an
employer, you should consult your solicitor or person responsible for human
resources, to clarify each individual situation. The payment represents a
form of compensation to help the employee get back on their feet and seek
alternative employment. Employees who have worked less than two years are only
entitled to the contractual notice period or money in lieu of their notice
period. As well as the statutory redundancy payment, if the employee has not had
all the holiday they are entitled to, by the date their work is scheduled to
end, employers must pay the employee in lieu that holiday entitlement. As a
caring and good-natured employer, you may choose to offer more than the
statutory minimum to help the employee you are making redundant.
Alternatives to Redundancy
- employers
naturally want to avoid making valued employees redundant. Any redundancies send
a worrying message to the remaining workforce, (that their jobs are unsecure and
the company is struggling). All the original money spent recruiting and
training the staff is wasted. To make matters worse, should economic conditions
pickup in future, the employer will have to spend money again recruiting and
training new members of staff. However, there are some alternatives to making
employees redundant, which may retain skills, keeping valued employees happy, while
partially reducing staff related overheads. The main ones are as follows:-
-
Allow employees to take a sabbatical, which represents an agreed period of
unpaid leave. Following the end of the period, employees rights are fully
preserved and they could return to work. This helps reduce staff costs in
the short term,
while avoiding redundancy and retains valued and senior members of staff.
-
'Lay Off' employees or put
them on a 'Short Time Working' basis. These processes are
defined under the
employment rights act 1996 (ERA). Short time working can only be implemented
where, as a result of reduced hours of working, the employee will earn less than
50% of their normal weekly pay. If the reduced hours equates to less than 50%,
and a change in the employee's contractual terms and conditions will need to
be implemented. In both cases, employee agreement must be sought.
Also the employer
must have an express contractual right to
implement short time working or lay the employee off. Lack of contractual rights
or agreement would be tantamount to a breach of contract, leading to a possible
constructive dismissal claim by the employee. Employees may still be entitled to receive a redundancy
payment situation where short time working or lay off lasts:-
Related Articles: Business Training Career Advice Employee Redundancy Job Interviews
Job Hunting Recruitment Agencies UK Employment Laws Working From Home Writing
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