Which law covers redundancy

Employers who decide there is no alternative to redundancies still must follow normal fair redundancy procedures, using the organisation's own procedure if any and all the stages referred to in this factsheet. There are logistical challenges in following ordinary principles if employees are not at work or working remotely, especially in communication and consultation. The stages can be undertaken remotely for example digital election of employee representatives but this will require careful and innovative planning.

All employees affected must have the equipment and skills to participate in a digital process. There are pre-existing rules where employers can defend inadequate compliance with the minimum 30 or day collective consultation periods if 'special circumstances' apply.

Redundancy can be a very challenging and upsetting situation for affected employees and the wider workforce. Announcing redundancies affects staff morale, motivation and productivity. Employers need to handle the situation as sensitively as possible to reduce the negative impact.

The law currently gives women made redundant while on maternity leave the right to be offered a suitable alternative role in advance of their colleagues. A Bill to extend this protection for six months beyond maternity leave was not passed in the last Parliamentary session.

It may be reintroduced. Making someone redundant because of their age, sex, sexual orientation, marital status, disability, race or religion or any other protected characteristic is unlawful under the Equality Act Every employer should consider having a formal redundancy procedure.

In many organisations a formal agreement may exist between management and trade union or employee representatives. Exact procedures will vary according to the timescale and size of the redundancy programme, but organisations should follow these stages as a minimum:. Organisations should always try to avoid redundancies and consider alternative approaches, such as:.

The group from which employees will be selected for redundancy the selection pool must be identified carefully. It will usually consist of at least one of:. In many redundancy situations, the employer may identify a range of selection pools. If an employer fails to consult and consider a selection pool correctly, the dismissals will be legally unfair. After the careful planning stage, offering a voluntary redundancy package and seeking volunteers may avoid compulsory redundancies.

Employers are required to consult individual employees and give them reasonable warning of impending redundancy. An employee is entitled to be accompanied at all individual consultation meetings by a trade union representative or colleague.

If 20 or more employees at one establishment are to be made redundant, collective consultations with recognised trade unions or elected representatives must start within minimum time scales:. Collective consultation must be completed before notices of dismissal are issued.

If there are no recognised trade unions or employee representatives, the employer must facilitate an election, by the employees, of representatives for the consultation. For example, employees are entitled to be consulted on the proposed selection process and scoring system. At the start of the consultation process the employer is legally obliged to give the following information to the representatives:. When the consultation is finished, the employer may need to choose individuals from within the selection pool if there are not enough volunteers for redundancy.

These choices must be based on objective criteria such as:. It can also be an unsatisfactory way of keeping the most competent employees.

Employment tribunals look favourably on selection procedures based on a points system which scores each employee against relevant criteria. Employers must take great care in choosing and applying the criteria to avoid discrimination. For example, selecting part-timers could be discriminatory if a high proportion of women are affected. Scoring should, if possible, be carried out independently by at least two managers who know all employees in the selection pool.

Marks from the two assessors should be added together to give a total score for each employee. Employers must consider offering suitable alternative work to redundant employees. If employees unreasonably refuse suitable alternative work they may lose their entitlement to a statutory redundancy payment. Employees can have a four-week trial period in a new role. If the employer and employee then agree that the role is not a suitable alternative, the employee reverts to being redundant.

At least one further consultation meeting should be held, with the actual number of meetings depending on what the employee has to say. The employer must consider any points that the employee puts forward. Once the individual consultation is complete, the employer must decide whether the employee is to be made redundant and give a written redundancy notice.

This will be either the statutory minimum notice or the contractual notice, whichever is the greater. The employer must also explain the redundancy payment calculation. There are various direct and indirect costs to employers associated with redundancy.

Direct costs include contractual or statutory redundancy payments: dismissed employees with two or more years' service are entitled to a minimum statutory redundancy payment based on a formula similar to the basic award for unfair dismissal. Current levels of statutory payments are on our Statutory rates page and also on the GOV.

UK website. Although there's a maximum statutory redundancy payment, our surveys find many employers pay more than the law requires.

Handling redundancy sensitively can make a significant difference to how people cope. Make sure that everyone knows their contribution to the business was valued and that redundancy selection is in no way a reflection on them personally. The employer should take up the responsibility of providing employees with formal and regular updates of the process, along with supplying appropriate documentary evidence pertaining to the procedure.

If the employer undertakes a fair and transparent procedure for the redundancy process, the employer will be well-positioned to fend off against any subsequent labour claims. Following on from the actual redundancy procedure, the employee whose contract was terminated would be empowered to legally claim compensation and certain forms of consultation and compensation.

The ECJ decided that the threshold was to be set at 20 employees undergoing redundancy under one establishment and that the dismissals should be conducted independently of one another. This duty to provide consultation by the employer could also be enjoyed by employees who may be affected by the proposed dismissals as well, i.

Thus, even the co-workers affected by the dismissal of their colleagues may seek consultation. When an establishment seeks to dismiss or more employees as redundant, the consultation must begin 45 days prior to the dismissal going into effect, and where there are 20 to 99 employees being dismissed, the consultation period specified by the ECJ is 30 days.

Along with consultation, any UK employee who is dismissed as redundant is entitled to receive the following:. The employee may lose the right to claim SRP if the employee, on unreasonable grounds, rejects an offer of suitable alternative employment. In the event that the employee had been employed for a minimum period of 2 years under one employer, and that the employment period has not exceeded 20 years, the SRP will be calculated as follows:.

Several situations may also arise wherein an employer may choose to pay the redundant employees an enhanced amount ex-gratia or non-contractual pay. Such situations include:. Any of the aforementioned payments, such as the SRP, and the non-contractual payment, are exempt from any taxes up to a limit of GBP 30, They are as follows:.

However, if handled correctly by the employer, the process could lead to an amicable departure of the employee. As recapitulated in the article, several means of legal recourse are also offered to the employee in such situations, given that the employee is qualified to obtain the same. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Learn More Accept. United Arab Emirates. Employment and HR. Your LinkedIn Connections with the authors. Your employer must use a fair and objective way of selecting job roles to make redundant, and tell you what it is.

This is often in return for an extra payment. Employers always have to consult with employees before dismissing them on the grounds of redundancy. Your employer must carry out collective consultation. This means consulting with your union rep if there is one or, if no union rep, with your elected employee representative s. If the employees decide not to elect a representative, consultation will be with individuals only. According to redundancy law, if 20 or more employees are going to be made redundant, the consultation process is more structured and must involve trade union or employee representatives.

The amount of time you can take off has to be reasonable. For example, if you work a five-day week you can take two days off in total to attend interviews, and your employer will have to pay you for this time. Have you been offered a job and your new employer wants you to start before your redundancy notice ends? Then speak to your employer and see if you can leave early without losing your redundancy pay. Acas offer free, confidential and impartial advice on all employment rights issues in England, Scotland and Wales.

Call the Acas Helpline on or visit the Acas website. The Labour Relations Agency provides an impartial and confidential employment relations service in Northern Ireland. MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper. Download app: WhatsApp.

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