Basics

Redundancy is dismissal. As such, it can be ‘unfair' and anyone with 12 months service can bring a claim with little cost or formality. Indeed claims can arise through minor procedural slips which are impossible to put right.

The minimum any Employer must prove is :

• a  true Redundancy situation
• proper Consultation
• fair Selection
• compliance with mandatory Dismissal Procedures

Redundancy Situation

It is essential fromteh beginning that you make it clear it is a job, not an individual, which is made redundant.

Employees often claim that ‘Redundancy' is not the real reason for their dismissal.  Employers should be able to produce documentary evidence of, say, a downturn in demand or the reasons for a re-organisation.

Minutes should be kept of any management meetings when redundancy was discussed to show that alternatives were considered e.g. lay-offs or short time working.

Consultation

Consultation should take place as early as possible and before any final decision is made.  It is not enough to consult while someone is working their notice, on the basis that the Redundancy could be rescinded.

The consultation must take place over a reasonable period.  We recommend at least two weeks for weekly paid staff and a month for salaried employees.

Employees should be told of any vacancies in the firm or any associated employers.  The employer should not make the decision whether it is suitable. Whenever possible there should be two members of management at consultation meetings and proper minutes should be kept.

Selection

The Employer may have a Redundancy policy or recognised procedure. If so, this should be followed.

In other cases, management is free to choose its method - but beware. It must be objectively justified and cannot depend on personal preferences or be discriminatory. Last In, First Out is a time-honoured approach. Now it is likely to breach Age Discrimination rules!

Other criteria might include -

• attendance
• skills/qualifications
• discipline
• timekeeping

Employers should document their methods and criteria so they do not appear to be reconstructed in hindsight.

Termination

If it appears likely someone will be made redundant, the Statutory Dismissal Procedure (SDP) must then be followed, as with a normal dismissal. This requires:

Step 1 - Written letter with rights

Step 2 - Meeting, with companion

Step 3 - Right of appeal

Compliance with SDP does not mean the Redundancy is fair but non-compliance does mean it is unfair.

The underlying events are entirely irrelevant if an Employer fails to comply with SDP. The employee need only show the procedural breach. This equals Automatic Unfair Dismissal. Pass Go and collect the money.

Financial Implications

Done properly, Redundancy costs are low. Unless companies want to be more generous, staff need only get:

1. notice pay
2. £330 per year of service (depending on age)

This does not add up to much for someone with say 10 years' service.

Get it wrong, however, and the picture changes. Official figures show the average award for Unfair Dismissal is £8,000. Add potential uplifts. Factor in your legal costs, to say nothing of unproductive management time.

Given that legal fees are not recoverable in the Tribunal, it is costly even to win! Easy to see how a disgruntled employee might ‘have a go' - at your expense. 

Practical Tips

Remember the legal position - Redundancy is one reason for dismissal which can be valid at law.  So is Misconduct.  Yet you would not dream of cutting corners in a Misconduct dismissal.  Why do so for Redundancy ?

A few simple tips will avoid headaches:

• plan ahead
• do not rush the process
• do not make it personal
• use the 12 month window where you can
• comply fully with SDP

Finally, take legal advice right from the planning stage.  This will stop you saying or doing something you later regret.  Afterall it is pretty difficult to ‘put the toothpaste back in the tube'!

Michael Morse
Tel: 0113 225 8811
E mail: mmorse@godloves.co.uk