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Redundancy legal advice for employers

 If you need legal advice, whether as employer or employee, on any aspect of redundancy law, contact our employment lawyers. We offer practical and cost effective legal advice in this area. 

Redundancy situations are extremely difficult for both employer and employee, involving considerations of fairness, procedure, notice, redundancy law, and sometimes tax on redundancy payments. The term redundancy often covers a multitude of different situations and can also include voluntary redundancy.

 Last in first out? 

Many employers believe that a policy of “last in first out” is both an acceptable and fair way to deal with redundancies. Redundancy is no different, in essence, from other forms of fair or potentially unfair dismissals – the legal test is based on the employer acting within a “range of reasonable responses”. Having said this, last in first out will rarely be a safe approach.

Generally speaking, the best approach by employers is to factor in a number of different criteria, performance and otherwise, and to ensure that the methodology is clearly documented. It is also vital for employers to actively consult with employees who are at risk and to give the employee an opportunity to put forward alternatives to redundancy.

 What is a fair redundancy dismissal? 

  • The redundancy grounds must genuinely exist.
  • The employee must be treated fairly in the procedure used prior to the final decision to dismiss.
  • The redundancy must be provable on its facts.
  • The employee must be fairly selected and consulted with a view to avoiding redundancy.

 What’s the legal test for an employee being redundant? 

The statutory definition provides that the dismissal must be attributable wholly or mainly to the fact that:

  • The employer has ceased, or intends to cease, completely or in an employment place, to carry on the business for the purposes for which the employee was employed; or
  • The requirements of the business for the employee to carry out work of a particular kind, completely or in a particular place, has ceased or diminished, or is expected to.

There are basically three situations which may result in a redundancy situation:

  • Either part or all of the business closes in which the employee works.
  • Demand reduction due to economic downturn resulting in less or no work.
  • Business re-organisation resulting in less jobs or significant reduction in work available.

 The redundancy process 

To remain fair the redundancy must also be procedurally correct which involves the use of appropriate selection criteria, identification of the selection pool, due consultation, adherence to relevant contractual matters and an overriding requirement that the redundancy is proven to be genuine.

Size and resources of employer relevant

The bigger the employer the more the Employment Tribunal will expect of taht employer. However, turning this around, a very small employer shouldn’t assume they can overlook carrying out a fair process. The burden on larger employers is perhaps best viewed as requiring such an employer to go to extra lengths to look at alternatives.

Unfair dismissal and discrimination

With redundancy situations, the employee will only be able to claim unfair dismissal if he or she has the requisite period of continuous employment, which is now 2 years. However, the position is not as straightforward as this and even if an employee does not have sufficient continuity of employment, if he or she are unfairly or arbitrarily selected they may claim that the decision was based on discrimination, either race, sex, disability, age or religion and there is no qualifying period for making a discrimination claim.

We advise many employers on how to safely navigate the legal and procedural minefield of redundancy. Good redundancy solicitors can save you a lot of stress, time and money.Get in touch to find out how we can assist you.