Considering Redundancy: What is the Process?
1 July 2020
Redundancy is the termination of employment due to the work an individual does ceasing (e.g. due to a business closure) or diminishing significantly. It should be used as a last resort, bearing in mind the initial costs and when businesses may return to growth.
Key considerations before making staff redundant
- Consultation: If you need to consider redundancies and have placed your workforce, or the relevant section of it, ‘at risk’ of redundancy, you will need to consult individually and collectively with your workforce. The aim of consultation is to avoid any/all redundancies.
- Collective redundancies: There are special rules that apply to collective redundancies where 20 or more roles are affected. Not following these rules can have significant financial implications. It’s important to remember that employees are redundant at the end of the process, not before you have consulted with them about ways to avoid or minimise job losses.
- Evaluating the work: The key thing to focus on is the work, not the individual. It may seem obvious to you whose job is ending, but it’s vital to step back and consider the remaining work and the skills across your workforce before making any decisions. If people are doing similar work and you need fewer of them, then you may have to ‘pool’ them in order to choose between them. Through consultation you must agree a fair way of evaluating the work and everyone’s skills in order to reach a decision on who is selected for redundancy.
- Redundancy pay: Employees with more than two years’ service are entitled to statutory redundancy pay, you may also have contractual redundancy pay to consider.
- Alternatives to redundancy: Alternatives to redundancy are imposing holidays with notice, reducing hours, agreeing pay reductions, reorganising the work, adapting your business model (i.e. hotels offering NHS workers rooms at zero/very low cost), laying off workers, or putting them on short-time working. (Note that this requires a contractual right in the Contract of Employment and/or Employee Handbook).