How Long After Redundancy Can You Rehire in the UK?
A redundancy occurs when a role within a business is no longer required.
If a role is redundant, then the employment contract will be terminated and the employee may be entitled to a redundancy payment. Concerns may arise when an employer wants to re-hire into an identical or similar role following a redundancy.
What is Redundancy?
Redundancy describes the situation when there is no longer a need for a particular role within a business. This occurs most commonly when a business is struggling financially and needs to cut costs. For example, there may be a team of 5 employees carrying out a particular task, and the business decides that the task can actually be completed by 4 people, leaving one role redundant.
Redundancies can also occur if a business decides to stop carrying out a particular function entirely, wishes to outsource a task, or moves that part of the business to a different location.
If a business thinks that redundancies are necessary, it must first consider whether there are any alternatives to redundancy. A proper consultation must be carried out with the affected employees, and if a head-count reduction is necessary, a fair selection process must be used to decide which employees will remain.
Rehiring After Redundancy
Following a redundancy, a business may wish to re-hire an employee whose employment was terminated by reason of redundancy. This can have benefits both for the business – hiring an ex-employee with a proven track record and who is familiar with the business – and for the employee. However, there is are also risks to the business which must be carefully navigated.
The biggest risks occur when, having deemed a certain role to be redundant, the needs of the business then change once more and either that same role, or one very similar, is required once more. Great care must be taken in this situation, as any suggestion that the redundancy situation wasn’t genuine could lead to an unfair dismissal claim.
Legal Considerations for Rehiring After Redundancy
There is no legally defined time period for which a business must wait before re-hiring after a redundancy. However, given that most Employment Tribunal claims must be issued within 3 months of termination, it is sensible to wait for at least 3 months following the redundancy.
Any employee who is re-hired following redundancy will be starting from “day one” with regard to their statutory employment rights. To allow the employee continuity of employment would suggest that the original redundancy wasn’t genuine. Similarly, if the “new” role into which the employee is hired is identical or very similar to their previous role, again this will cast doubt upon the justification for the redundancy.
Best Practices for Rehiring After Redundancy
Transparent communication is essential when rehiring after redundancies, in particular for existing staff. Their perception may be that the returning employee has been given a redundancy payment and is now walking back into a new job, which may seem unfair. It is therefore very important that the business maintains clear and open communication with both existing employees, and the returning employee, as to the reasons why it is necessary to re-hire.
Fair Selection Process
Once it has been decided that there is a vacancy, a fair selection process must be followed. The business cannot simply decide to offer the vacancy to an employee whose role was previously made redundant, no matter how attractive that may seem.
If the business seeks to re-hire for a role might be considered the same as or similar to one which was recently made redundant, it is vital that the business can show why the new role is, in reality, significantly different. This could be because there is a change in duties or responsibilities, or because the new role requires different skills or qualifications.
The new role should be advertised both internally and externally and all applicants who are suitable must be given proper consideration. The business should not simply “rubber stamp” an application from an employee who was previously redundant.
Documentation and Record-Keeping
It is vital that the business keeps a full record of the decision making process relating to the new role. This should start with recording why the vacancy has arised – what has changed since the redundancy situation, and why is the new role different? Evidence should also be recorded around the advertising of the role, the recruitment process and why the successful applicant was chosen.
The importance of evidence keeping relates to the ability to show an Employment Tribunal, if required, how the requirement for the new role does not undermine the validity of the previous redundancy situation.
“Redundancy, on its own, can be a very complex exercise for an employer. Adding re-hiring into the equation can make it even more difficult to ensure that the business is not left open to a claim for Unfair Dismissal. Taking expert legal advice at the outset, and throughout, will help to minimise the risk to the business and ensure that both the redundant employees, and those who remain, are treated fairly and understand the business case for any changes to the workforce.”