Ensuring a fair redundancy process

05.10.2021
Claire Moore
Human Resources, COVID-19

Businesses may find themselves in the position where there is no option but to make redundancies after the Government’s furlough scheme came to an end.

Last week saw the furlough scheme come to an end after 18 months. Unfortunately without the furlough scheme, many businesses may now find themselves in the position where there is no option but to make redundancies. It is important that a full and proper process is followed when making redundancies. 

We have identified some of the key areas which you need to ensure are fully considered when making redundancies. Failure to fully carry out any of the below in the correct manner could see employees eligible for unfair dismissal claims.

Genuine business reason

For a redundancy to be deemed a fair dismissal the business reason needs to be objective and justifiable. A fair redundancy will be as a result of; a business closing, a particular location closing, a reduction in the amount of work available or a reduction in the number of employees needed to do the work. These business reasons must be communicated to employees throughout the consultation process. Should you be having issues with an employee’s conduct or performance you would need to address this via disciplinary or performance management processes opposed to using redundancy as a way of exiting the employee. If you will need to re recruit in a similar position in the near future then it would suggest that there is not a genuine business reason for the redundancy which could see an employee able to pursue an unfair dismissal claim, despite receiving a redundancy payment.

Internal policies

Prior to entering into a redundancy consultation it is important to check the internal policies and procedures in place. If there is a specific redundancy policy, or a clause with employee contracts, this needs to be considered and followed to avoid the risk of breach of contract.

Identify the selection pool

It is important to identify the correct selection pool at the outset, considering all roles that may be similar and grouping them all together. You must look past the job title and consider any similarities in the day to day duties performed by different members of the team. If it could be argued that another individual is carrying out a similar role it is likely they should be included within the selection pool.

During the consultation meetings with employees you must inform them how the selection pool has been identified, take on board any feedback they may provide and be open to widening the selection pool if needed

Fair selection criteria

Where there is more than one individual in a selection pool you will need to decide on a method to select which individuals will be selected for redundancy, this may be through the use of a selection matrix or interview depending on the circumstances. Employees will need to be informed of the chosen selection method during the consultation process and prior to the scoring taking place. During the consultation employees must be informed how they have scored against others, they are also entitled to challenge the scoring.

Meaningful consultation

Employees must be consulted with about the proposed redundancies and it must be meaningful. One of the common pitfalls during the consultation process is that decisions have been made prior to consultation taking place. The consultation process is to inform employees that they are at risk of redundancy and allow them to put forward proposals and suggestions as to how the redundancy situation could be avoided. Any ideas an employee puts forward should be given due consideration, and a full response provided to the employee in relation to their suggestion.

It is also essential that all individuals within a selection pool are included in the consultation process. It cannot be the case that employees are scored in private with only the lowest scoring individual being put at risk of redundancy and consulted with.

Please note for situations where 20 or more redundancies are proposed within a 90 day period collective consultation will be required. This will see the nomination of employee representatives along with a minimum consultation period of 30 days for 20-99 proposed redundancies, and 45 days for 100 or more.

Right to appeal

A redundancy is classed as a dismissal and best practice suggests that any employees who are made redundant should be given the right to appeal the outcome of the process. The employee could appeal the basis of the selection pool, the criteria used or even the need for redundancies. Should an employee make an appeal this should be dealt with in a timely manner and, where possible, chaired by a manager/director who was not involved in the original consultation process.

Redundancies should always be the last resort and a recent joint statement from ACAS, CBI and the TUC has urged employers to consider all options and communicate openly with employees to try and avoid the loss of jobs. Unfortunately, in the current climate redundancies will be inevitable but following a thorough process will be fair for employees and also reduce the risk of tribunal claims against your business. 

If you require further information surrounding redundancies

 


Wide-ranging tax planning and compliance services for individuals seeking advice and guidance from our team of experienced and highly qualified professionals.

Friendly and coherent advice and guidance on accounting and tax matters for small business owners including those starting out for the first time.

Established businesses requiring accounting and tax compliance services, forward thinking tax planning advice and the support to help your business succeed.

Our full range of enhanced corporate services aimed at large companies and those requiring audit, assurance, corporate tax advisory and diverse tax planning services.

Glossary

Test

This is a test definition

more