Redundancy

 

Redundancies take place when an employer reduces their workforce. This may be because a workplace is closing down or because fewer people are needed for work of a particular kind. However, at a time when the economy is in trouble and redundancies common an employer may be tempted to get rid of you if your face doesn’t fit and call it a redundancy. If you think that you have been dismissed and the real reason is not redundancy you should take advice. You may be able to win some compensation at an employment tribunal. Some employers will even try to treat people so badly to make them resign so that they can try and avoid the responsibilities they owe staff made redundant. In this case you might have a claim for constructive dismissal.

However, if your employer is genuinely reducing the size of the workforce then it will most likely be a redundancy. Your employer could still be liable for unfair dismissal however if you are unfairly selected for redundancy. However, it is best to seek advice as the law is complex. For example, even if an existing member of staff is given your job, you can still be made redundant legally, provided there is an overall loss of jobs. This means that an employer can normally reshuffle their workforce after making some people redundant as long as they are genuinely reducing the size of their workforce. However, it will not normally be a redundancy if your employer immediately takes on someone else to do your job. In such situations you could well have a claim against your employer for unfair dismissal, even though they have told you are redundant. However this does not automatically stop your employer from taking on any new staff. They could argue they picked up an unexpected order or contract. They are also free to take on someone to do a completely different job in your workplace, or someone to do your job but in a different workplace. Your employer may require you to move work places if that is in your contract of employment. If it is and you refuse to move you may not get redundancy pay. On the other hand, your contract may say that in a redundancy situation you should be offered a chance to move. In that instance the employer should make you that offer before offering that post to other staff. You should seek further advice if either of these situations affects you.

Is my selection for redundancy lawful?

The law says that redundancy is a fair reason for an employer to dismiss an individual and if done correctly will not amount to unfair dismissal (see our section on unlawful dismissal). To be lawful however an employer must have followed a fair procedure before making an employee redundant. In addition to using fair criteria (see below) an employer should also meet with an employee to explain why they have been selected for redundancy, explore any other employment options and allow the employee to appeal any redundancy decision. Employees who are made redundant may be entitled to redundancy pay. Employers must also consult trade unions or workplace representatives before making groups of workers redundant.

What is a fair procedure for selecting for redundancy?

When staff are being selected for redundancy, your employer must ensure that the selection criteria are fair and do not unfairly discriminate against you. If your employer does not then you could have a right to claim unfair dismissal.

Redundancies cannot be made on the basis of gender; race; age; disability; sexuality, religion, belief or because you are transgender either directly or indirectly.

Fair considerations by an employer include:

  • any agreed or existing procedure  (check with your trade union)
  • skill and capability
  • attendance record
  • conduct record
  • The type of work needed to be done by the continuing workforce.

Consideration must be given for poorer performance, attendance and conduct caused by a disability.

You should be told what factors have been used in the selection process. If not you should ask, and if you are still not told you should seek further advice.

Good employers will ask for volunteers and offer early retirement before considering compulsory redundancy.

 

Other procedural requirements – there are other requirements which if not followed could give you the right to bring a claim for unfair dismissal:

Consultation on redundancy

If your employer is considering making you redundant they should hold a meeting with you to discuss the reasons for the redundancy, why you have been selected, and to consider whether there is another job you can do. You have the right to be accompanied at this meeting by a trade union official or a colleague. If your employer does not meet you then your dismissal may be unfair legally and you may be entitled to compensation

If your employer is considering making more than 20 people redundant over a 590-day period, they must, by law, consult representatives of employees who are affected directly or indirectly by the possible redundancies. In many cases, redundancies may affect the entire workforce.

If your employer recognises a union, then the consultation should be with the union. If not, your employer must consult with elected employee representatives. Employee representatives may either have been elected specially to be consulted on the proposed redundancies or may be part of an existing elected representative body such as a staff council.

The agenda for consultation must include ways of avoiding redundancies or of reducing the numbers affected. Where a workplace is closing down, the employer should also consult on the reasons for the closure. Agreement does not have to be reached as a result of the consultation but the employer must consult “in good faith”, that is, with a view to reaching, agreement. Some information must be disclosed to the representative body including:

■ the reasons for the redundancies

■ the numbers and descriptions of those affected

■ the proposed method of selecting those to be made redundant, e.g. ‘last in, first out’ (the method must not be discriminatory, for example by selecting jobs that are predominantly done by women)

■ how any redundancy payments better than the legal minimum will be worked out.

Consultation cannot just take place one afternoon when the managing director has a slot in their diary. There are minimum periods during which representatives must be consulted:

■ If 20 to 99 employees are to be made redundant, consultation must last at least 30 days.

■ If 100 or more employees are to be made redundant at one establishment over a period of 90 days or less, consultation must last at least 90 days.

This consultation can make a difference. It at least makes management pause for thought. At best, workforces have been able to suggest ways of avoiding compulsory redundancy altogether. For example, in some workplaces all staff have volunteered to work fewer hours in the knowledge that trading conditions may improve in the future. In other workplaces the consultations have led to fairer ways of choosing redundancy, perhaps by improving redundancy payments to the point where there are enough volunteers. Individual notices of redundancy must not be issued until there has been sufficient consultation in line with these requirements. A complaint that an employer has failed to consult properly or that redundancy notices have been issued before consultation ends can be made to an employment tribunal by the trade union or the employee representatives. If the tribunal finds that a complaint is justified it can make a protective award, which will require the employer to pay the employees their normal pay for the period covered by the protective award (that is, the 30 days or 90 days consultation period depending on how many redundancies are happening). In addition to consulting recognised trade unions or employee representatives, employers should also consult each individual employee who has been selected for redundancy. This individual consultation usually takes place as part of the statutory dismissal procedure. Redundancy dismissals may be unfair where an employer has consulted with a trade union or employee representatives but not also talked to the individual.

 

Suitable alternative employment

If your employer is considering making you redundant they have some responsibilities to help you find other work. They should consider whether employees who are likely to be affected by redundancy can be offered suitable alternative employment within the same organisation or in an associated company.

(If your employer offers you an alternative job, you will need to think carefully. If you turn it down you may no longer be legally redundant, and would be in the same position as if you had just resigned.

You will lose your redundancy rights if:

■ your employer (or an associated employer, or an employer taking over the business) offers you a new job before your current contract expires and it starts within four weeks, and

■ your employer makes the offer in writing and

■ the job is suitable for you.

You can turn down a job that is clearly unsuitable, but you can also try it out to see if it suits you. Again there are rules about this:

■ You can agree to try the replacement job out for a four-week trial period.(This period can be extended if you are being retrained, but there must be an agreement in writing.)

■ If at the end of the trial period you are still in the job, then you lose any rights to a redundancy payment. In law you have accepted the new job.

■ If you reject the new job before the end of the trial period because it turns out to be unsuitable, or for good personal reasons, your redundancy will be considered to have started the day your old job ended. However, if you say the new job is unsuitable but your employer says it is, your employer may refuse you your redundancy rights. So you should take advice before you walk away from an alternative job offer.

If your employer says you have left a suitable job and is refusing you redundancypay, you will need to make a claim in an employment tribunal and show them why the job was unsuitable. If the tribunal finds that you have refused a suitable offer of alternative employment you will lose your right to a redundancy payment.

Time off to look for work or for training

If you are made redundant you will usually have a right to reasonable paid time off during your normal working hours to look for another job or to make arrangements for training. To qualify for this you must have worked continuously for your employer for two years or longer on the date when your notice expires. The law says that you are entitled to reasonable time off. It is not easy to define this and if there were a dispute it could only be settled in an employment tribunal. But anything that is clearly a sensible and realistic attempt to find work or appropriate training is likely to be fine. You should be paid your normal pay for anytime off, but there is an upper limit on how much your employer has to pay of two fifths of a week’s pay.  Of course many employers are more generous and will pay you in full for any time off searching for a job. Indeed this is one thing you might want to ask for when you first discuss redundancy with your employer You can make a complaint to an employment tribunal if you have been refused reasonable time off to look for work or to make arrangements for training. The tribunal can award you the pay you would have received if your employer had permitted you time off or the balance of the pay which is due to you. You should seek advice from your union, ACAS or an advice centre before making a complaint to an employment tribunal).

Breach of contract

If your employer wishes to change the terms of your contract – for example by changing your working hours or patterns of attendance, by purporting to lay you off or put you on short-time working for a period of time, or by changing your pay or other terms and conditions of your employment – the change will only be lawful if you or your union agree to it. An unauthorised, one-sided variation is a breach of your contract of employment.

Summary

If your employer wants to make people redundant they:

■ must follow a redundancy dismissal procedure during which they must tell you the reasons for the redundancy and explore any alternative job opportunities

■ have to give notice of redundancies and consult formally with the workforce where they are considering making more than 20 employees redundant over a period of 90 days

■ will have to pay redundancy pay to employees who have worked for more than 2 years

■ must not choose who gets made redundant on the basis of their sex, race, disability, age (unless objectively justified), sexual orientation, transgender status, religion or belief, pregnancy or trade union membership.

If they don’t follow these requirements, they may not be able to make the redundancies or may have to pay compensation to people who have been treated unfairly. Employers should also provide you with time off for job hunting or to arrange training.