Redundancy

A redundancy may occur where an employer no longer has a need, or it has a reduced need, for employees carrying out particular functions or work. The term “redundancy” is clearly defined in section 139 of the Employment Rights Act and any redundancy must fit into that definition.

The regulations set out clear guidelines on the redundancy process, including details of how employees must be consulted and how they are selected. One of the most important aspects of a redundancy situation from an employer’s point of view is making the selection process fair when reducing numbers of employees.

Employers need to be clear about the basis on which they are making their selections. Selection criteria could include:

• skills, qualifications and aptitude;
• standard of work and/or performance;
• attendance and disciplinary record.

Any selection criteria used must be objectively justified and objectively applied.

Employers must give notice to those employees who will be made redundant. The length of this notice depends on how long each employee has been working for the business and ranges from one week to 12 weeks or other such period as set out in the contract of employment.

If an employee is made redundant, they are entitled to a redundancy payment (providing they have at least two years’ service). The amount of the payment will be calculated based upon the salary of the employee, their length of service and their age. It is calculated according to a set formula.

Redundancy dismissals, if not carried out properly, have the potential to lead to claims for unfair dismissal. It is therefore essential for employers considering redundancy dismissals to take advice from an early stage to ensure that errors do not occur and are not compounded by the time notice of termination is given.