What is the Legal Process for Redundancy?

Every employer is under a legal obligation to follow a lawful redundancy process which must be transparent and supportive towards the affected workers. Employers have to think about not only the staff who are leaving but the morale of those who remain. The employer’s obligations ahead of potential redundancies are numerous and exacting, and any employer needs to ensure they follow the letter of the law. Throughout the process, an employer must demonstrate compliance with the law and have exhausted all other options before making staff redundant. Any glitches could result in a claim for unfair dismissal. A procedural hiccough is enough for a tribunal to find in favour of the employee, even if a substantive case for redundancy remains.

The Process of Redundancy

In simple terms, redundancy is only lawful if the following fundamental tenets have been followed: –

• The process of selecting which staff are to leave must be fair and non-discriminatory
• Alternative and suitable employment must be offered within the organisation where possible
• There must be adequate consultation with the affected staff
• Sufficient notice of redundancy must be issued formally to selected staff

What are Fair Reasons for Redundancy?

An employee may be made redundant because of changes in the industry, so their role is no longer needed. This might be because of increased automation, such as the closure of bank branches because there is less requirement for face-to-face contact as more people bank online. Other fair reasons for redundancy include an organisation relocating or closing down entirely.

It is unfair and unlawful to make an employee redundant because of a characteristic protected by law, including gender, age, marital status, race, religion or disability.

Alternatives to Redundancy

Even if the employer has established a fair reason for redundancy, they must still consider any alternatives to making workers redundant. A failure to do this could result in a successful case for unfair dismissal. Alternatives can include: –

• Redeploying staff
• Reducing hours
• Reducing pay
• Retraining or reskilling staff
• Career breaks
• Early retirement
• Voluntary redundancy

This list is not exhaustive. Any alternatives must be discussed with affected staff during what is defined as the consultation phase.

Voluntary redundancy is when employees are offered financial compensation or incentive to leave the organisation voluntarily. Some employees may request voluntary redundancy if they can see which way the wind is blowing, but the employer is not obliged to accept a request from an employee. Sometimes, more employees volunteer for redundancy than necessary, so the employer must make a careful and fair selection from this pool to decide who leaves and who stays.

Compulsory Redundancy – How are Staff Selected?

Staff must be selected by applying pre-determined redundancy criteria unless there is a scenario where the entire organisation is closing. The employer must establish objective criteria that are clearly defined and understandable and do not unlawfully discriminate against any employee.

A scoring criterion is used to demonstrate which staff will be made redundant. This must be explained to each employee as part of their first consultation meeting before it is applied. Staff should be able to comment and raise objections or concerns before the evaluation process occurs.

The Redundancy Consultation Process

The process begins with a series of consultations or meetings, the first of which should explain the process, explore alternative solutions and detail the selection criteria. A timeframe for this should be established and made clear to each employee who may be affected. There should be a minimum of two consultation meetings.

There are slightly different processes depending on whether there is a large-scale redundancy (twenty or more employees) or a lower number. At the end of the consultation process, selected employees are given formal notice, which informs them of the date their contract will end, the details of their redundancy package, and how it has been calculated. The length of the notice period is usually governed by the employee’s length of service and contractual entitlement, or the statutory minimum, whichever is the greater.

How does Outplacement fit into the Redundancy Process?

Many employers hire in outplacement services, especially if they are making a lot of people redundant. An outplacement service provider can manage the post-redundancy period by supporting staff at all levels through group workshops, 1:1 careers advice and online provision. Staff feel valued because they receive psychological support and practical help from informed and impartial experts, a service provided by their employer at no extra cost and supplementary to their redundancy package. For the employer, outplacement can help manage the strain and limit any reputational damage.

We provide a comprehensive range of outplacement services for all types and sizes of businesses and organisations, with tailored packages for small numbers of staff or multi-faceted programmes for large-scale redundancies. We are experienced in many different industries and sectors and offer dedicated redeployment, change, resilience, and pre-retirement services.

Speak to one of our outplacement experts today and learn how we can help manage redundancies in your company or organisation.