Redundancy Quick Guide

Firstly, it is important to note that redundancy is a complex area of employment law, surrounded by legislation and case law with a number of statutory duties that employers must adhere to. This quick guide covers the main points but rarely is this process straightforward. We would recommend starting with a comprehensive redundancy policy and ensuring that any managers involved in the process have a good understanding of the policy and procedures before the process begins.   

Redundancy is a form of dismissal that occurs when a business closes down, or if the need for employees to carry out work of a particular kind has ceased or diminished or is expected to cease or diminish. 

1. Establish a Genuine Necessity

Firstly, establish whether there is a genuine need to make redundancies (as stated above). Redundancy should not be an excuse to get rid of low performing staff. If you need to replace the person being made redundant then there is no genuine case for redundancy. To deal with low performing staff you should instead consider going through a capability or disciplinary process. 

2. Internal Notification

The company should announce the situation, explaining the reasons at the earliest opportunity. This is also the time to invite voluntary redundancies if appropriate. Remember that you do not have to accept individual’s requests for voluntary redundancy and this should be made clear at the start. Remember that voluntary redundancies count for the purposes of calculating the number of proposed redundancy dismissals under the collective consultation legislation.

3. Notification to BEIS (Department for Business, Energy & Industrial Strategy)

You should do this through the Redundancy Payments Services (RPS) who act on behalf of the BEIS. This is required if you are dismissing 20 or more employees. For redundancies of 20-99 employees, a consultation period of 30 days’ minimum is required before the first redundancy notice is given, and for 100 or more employees, 45 days’. Failure to do so can result in a fine.

4. Communicate Severance Terms

Always follow what is in your redundancy policy (ensuring that your policy meets the statutory requirements). Communicate to employees, representatives and, where required, trade unions on how redundancy payments that exceed the statutory requirements will be calculated. 

5. Collective Consultation 

Collective consultation is required where 20 or more employees are being made redundant. There are certain legal requirements for collective consultations and if dismissals take place before the consultation period has ended, the employees can claim compensation. There are no rules for how you should carry out consultation for less that 20 redundancies, however, all affected employees have the right to be consulted with. 

6. Make Selections for Redundancy

Based on job roles, select people who are potentially at risk of being made redundant using objective criteria. Ensure that your selection criteria does not discriminate against individuals or groups of individuals. 

7. Consult with individuals 

This should happen in addition to any collective consultations. Consult individually with each person selected. Seek their views on any alternatives to redundancy such a redeployment or changes to working patterns. It may be necessary to consult with individuals over a number of meetings.  Remember that any changes to terms and conditions should be done with agreement and that there are legal rights for individuals who agree to an offer of redeployment that include notice periods and trial periods.

8. Statutory Notice Periods 

Employees dismissed by reason of redundancy have a right to statutory notice periods. that must be given to employees who are being dismissed by reason of redundancy. 

9. Issue Redundancy Notices

Once the consultation period has ended, issue notice letters and be specific about the date that work will stop and when employment legally ends. You can include severance payment information here or explain that this will be provided separately. Severance documents should include details of any redundancy payments if entitled (statutory or enhanced) and details of all other outstanding payments and when they will be paid such as outstanding wages, bonus, holiday pay, etc. 

Remember that once notices of redundancy dismissal have been issued, the employer is under a duty until the effective termination dates to seek to identify suitable alternative employment for the redundant employees.

10. Rights to Time Off

Employees with at least two years’ service and who are under notice of redundancy, have the legal right to take a reasonable amount of paid time off work to look for another job or to arrange training.

StreamHR have a team of qualified experts ready to help you navigate your way through this complex process should you need us. We can arrange training for your management team also supply you with template policies and letters if required.

Give us a call on 01384 563 050 to speak with a member of our team today.