Employment Advice

Redundancy: What is it and when does it happen?

Facing redundancy can be a challenging and uncertain time for employees.

08 Dec 2023

Team name
Esther Marshall

Esther Marshall

It is important to have a clear understanding of the redundancy process and your rights as an employee to ensure a fair and legally compliant procedure. In this comprehensive guide, we will delve into the key aspects of redundancy, including its definition, genuine and non-genuine redundancy situations, the selection process, and the rights of employees during this period.

What is Redundancy?

Redundancy, as defined by UK employment law, occurs when an employee’s dismissal is wholly or mainly attributable to the fact that the employer has ceased or intends to cease carrying on the business or has reduced the number of employees needed for a particular type of work. It can also arise when the workplace is closed, relocated, or when the business is transferred to another employer.

In simple terms, redundancy happens when the work an employee was hired to do is no longer necessary or available, either due to changes in the business, technology advancements, or organisational restructuring. It is crucial to differentiate genuine redundancy situations from non-genuine ones, which may involve unfair dismissal or discriminatory practices.

Genuine Redundancy Situations

Genuine redundancy situations are those where the need for a particular role diminishes or ceases to exist. Some classic examples of genuine redundancy situations include:

  1. Downturn in business: When a business experiences a decline in its operations, the need for certain roles may decrease, leading to redundancies.
  2. Technological advancements: Introduction of new systems or technology that replaces the need for certain job roles.
  3. Restructuring and reorganisation: When an employer reorganises the business to improve efficiency, resulting in a reduction in the number of employees required.
  4. Business closure or relocation: If the employer ceases trading, closes down a specific location, or relocates the business to a different place.

In these genuine redundancy situations, employers must still follow a correct redundancy process to ensure fairness and compliance with employment laws. Failure to do so may result in an unfair dismissal claim.

Non-Genuine Redundancy Situations

Non-genuine redundancy situations occur when an employer claims redundancy to mask other reasons for dismissal or to avoid following other procedures, such as performance management or disciplinary processes. Some examples of non-genuine redundancy situations include:

  1. Recent hiring or future hiring plans: If an employer has recently hired or plans to hire new employees in the near future, it may indicate that the redundancy is not genuine.
  2. Performance-related dismissal: If an employee’s performance has been criticised before facing a redundancy situation, it suggests that the dismissal may be more about performance issues. rather than genuine redundancy.
  3. Selective redundancies: If an employee is the only one or one of a few being made redundant in a large company, it may raise questions about the genuineness authenticity of the redundancy.
  4. Discrimination-based dismissal: Dismissing an employee based on protected characteristics such as pregnancy, gender, ethnicity, disability, sexual orientation, or religion is considered discriminatory and not a genuine valid redundancy.
  5. Personal conflicts: If the redundancy is a result of a poor relationship between the employee and their line manager, it may indicate that the redundancy is not genuine.

It is crucial to assess the circumstances surrounding the redundancy to determine whether it is genuine or non-genuine, as non-genuine redundancies may be subject to legal challenges.

The Redundancy Process: An Overview

A correct redundancy process involves several steps to ensure fairness and compliance with employment laws.

Notice and Consultation

Once an employer identifies a redundancy situation, they must provide employees with a notice period, which varies based on their length of service. For employees with less than two years of service, the statutory notice period is one week. For employees with two or more years of service, the statutory notice period is one week for each year of service, up to a maximum of 12 weeks.

During the notice period, employers must consult with affected employees, explaining the reasons for the redundancy and exploring alternatives, such as offering voluntary redundancy or providing opportunities for redeployment. Consultation ensures that employees have a chance to express their views and contribute to the decision-making process.

Selection Criteria and Pool

Employers must establish fair and objective selection criteria to determine which employees may be at risk of redundancy. The selection criteria should be transparent, avoiding any form of discrimination based on protected characteristics.

The selection pool should include employees who carry out similar work or roles that are affected by the redundancy. This allows for a fair assessment of employees’ skills, qualifications, and performance within a comparable group.

Selection Process and Individual Meetings

Once the selection criteria and pool have been established, employers must undertake the selection process. This typically involves assessing employees against the agreed criteria and determining whether they are provisionally selected for redundancy.

Employers should then conduct individual meetings with affected employees to discuss their provisional selection, provide feedback, and explore any potential alternatives or mitigation measures. These meetings allow employees to understand the reasons behind their potential redundancy and provide an opportunity for open communication.

Consultation and Appeals

Throughout the redundancy process, consultation should continue between employers and employees to address any concerns, provide additional information, and explore alternatives. Employees have the right to appeal against their redundancy if they believe the process was unfair or if they have valid grounds for challenging the decision.

Your Rights During Redundancy

As an employee facing redundancy, you have certain rights that protect you during this challenging period. It is important to be aware of these rights to ensure a fair process and to explore available options. Some key rights include:

Statutory Redundancy Pay

Employees who have been working for their current employer for two years or more are entitled to statutory redundancy pay. The amount of statutory redundancy pay depends on factors such as age, length of service, and weekly pay. The government provides a calculator to help employees calculate their entitlement.

Notice Period and Pay

Employees have the right to receive a notice period based on their length of service. The notice period allows employees time to prepare for the end of their employment and seek alternative opportunities. During the notice period, employees are entitled to their usual pay and benefits.

Suitable Alternative Employment

Employers have a legal obligation to consider offering suitable alternative employment to employees at risk of redundancy. Suitable alternative employment may involve a different role within the same organisation or a role in a different location. Employees have the right to accept or reject such offers, but refusing a suitable alternative without a valid reason may affect their entitlement to statutory redundancy pay.

Consultation and Communication

Employers are required to consult with affected employees throughout the redundancy process, providing them with information about the reasons for the redundancy, potential alternatives, and opportunities for redeployment. Effective communication and consultation allow employees to have a voice and contribute to the decision-making process.

Redundancy Selection Process

Employees have the right to be treated fairly and objectively during the redundancy selection process. Employers must establish transparent and non-discriminatory selection criteria and pool, ensuring that employees are assessed based on their skills, qualifications, and performance.

Appeals

If an employee believes that the redundancy process was unfair or that there are valid grounds for challenging the decision, they have the right to appeal. Employers should provide employees with the opportunity to appeal and consider the grounds for appeal in a fair and impartial manner.

M&P Commentary

Esther Marshall, specialist in Employment law, said:

“Facing redundancy can be a distressing experience, but it is essential to understand your rights and the correct redundancy process to ensure fairness and compliance with employment laws. By being aware of your entitlements, participating in the consultation process, and seeking professional advice if needed, you can navigate the redundancy process with confidence. Remember, you are not alone, and there are resources available to support you during this challenging time.

If you require further information or assistance regarding redundancy or any other employment law matters, consult an experienced employment law professional who can provide tailored advice based on your specific circumstances.”

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