The Redundancy Rules For Employers: An Outline of Correct Procedure

Redundancy is a complex process for both the employer and employees. As an employer, you should always abide by the law to ensure the process is just and genuine.

But with so many elements and rules to follow, what do you need to know? What procedures must you follow? How soon after can you rehire? Which reasons for redundancy are justified and which aren’t?

This blog is here to answer some of your questions. So, what is redundancy in simple terms?

What is redundancy?

Redundancy is a form of dismissal from your job. You can be made redundant for a range of reasons, but if you experience it, you can be eligible for redundancy pay, a notice period, a consultation with your employer, and time off to find a new job.

There are rules to follow when redundancy is occurring in your business, and it’s important to abide by them.

Redundancy rules for employers in the UK

Employment Rights Act 1996

UK redundancy law is set out in this legislation which outlines the rights of employees in the circumstances of dismissal, unfair dismissal, and redundancy. It’s there to protect the rights of workers, ensuring that they are treated fairly.

If the redundancy process fails to comply with the law and fair treatment, the employee may be able to claim unfair dismissal and bring it to an employment tribunal.

You can read the intricacies of the Employment Rights Act 1996 here.

Statutory Redundancy Pay

If an employee has worked for a company for 2 years or more, they may be eligible for UK statutory redundancy pay. Employers should be aware of the following structure for calculating redundancy payments:

• Half a week’s pay for each full year of employment if they were under 22
• One week’s pay for each full year worked between the ages of 22 and 41
• One and a half week’s pay for each full year of employment if they were 41 or older

Employers must ensure they provide the required notice period when making redundancies. This allows employees to receive their statutory entitlements while helping the business manage the transition smoothly. Employers should also ensure that redundancy processes are handled efficiently to minimize disruptions and allow the employee to begin looking for alternative work.

Justified redundancy

If you follow the right procedure, you can ensure that you treat your employees lawfully and fairly throughout the redundancy period. Here are some reasons that justify making redundancies:

• The organisation is closing.
• It’s required to change the types or number of roles needed in the company.
• The company is changing locations.
• The employee’s job no longer exists because the work is being done by others.

Unjustified redundancy

A redundancy may be unfair if you, as the employer, fail to:

• Meet with the employees individually
• Inform the company of your selection criteria
• Be open about the reasons for redundancy

Redundancies may also be classified as unfair dismissal if they are made for reasons such as:

• Their performance
• Their conduct
• A poor relationship with their superior.
• If they are pregnant, because of their gender, disabilities, sexuality, or if they are from an ethnic minority, religion or anything based on the Equality Act’s 2010 ‘protected characteristics’. This would suggest you are being discriminated against.
• If you are only making one person redundant in a large company – it shouldn’t ever be just one person.
• New employees are being hired.

Alternatives

Redundancy isn’t always the optimal solution. As an employer, consider finding other options such as changing working hours, offering voluntary redundancy, or moving employees into different sectors and roles within the company.

The recommended redundancy process

Every business should have a redundancy process in place. A staff handbook is a great way to ensure that all personnel are aware of the procedure and that it remains fair. Even if it’s a genuine redundancy, the employer should always follow the correct legal procedures.

Although we have set out the main points of a summary process below there are some important legal aspects that will require attention should you decide that you require a redundancy process. These are linked to how many people you will be making redundant, how many locations you have, when you have to inform the government etc. There may also be a requirement to have collective consultations in addition to individual ones with each employee.

In general, the process must explain:

• The selection process for those being made redundant
• How long the decision and wait time will take
• How to appeal if chosen for redundancy

The employer should always:

• Tell the employees as soon as they consider making redundancies
• Organise a meeting with the person/people being made redundant – this is often called the consultation process
• Make them aware of the next steps in the process
• Give notice of the above
• Talk to them about the nature of their redundancy
• Be open to answering questions

If you’re making 20-99 employees redundant, it’s essential for employers to:

• Organise a collective consultation: This is required if 20-99 employees are made redundant within 90 days at one location. The minimum consultation period is 30 days before the first redundancy and it should involve trade unions or elected representatives.
• Meet with individuals for consultations: You also must consult each affected employee individually to discuss redundancy reasons, alternatives, and ensure fair selection criteria.
• Provide a minimum of 30 days consultation: There needs to be 30 days before redundancies take place, and collective consultations should take up to 30 days, with 5 extra days to appeal.

Can you make someone redundant if their job still exists?

The simple answer is no. There are many reasons for legitimate redundancy, but it is illegal to make employees redundant while their job still exists. It’s only permittable if the job won’t exist anymore, whether that’s because of financing or company closure.

Rehiring

How long after redundancy can you rehire?

There is no set time period that you can or can’t rehire. However, if you quickly rehire for the same role(s) that people were made redundant from, you risk claims of previous unfair dismissal and unfair treatment.

Yet, the reason for redundancy may be no longer relevant. However, try to keep in mind that the sooner you rehire after redundancy, the more likely ex-employees will feel aggrieved.

 

How Trusted HR Can Help

The above advice is a summary of the types of steps you will need to follow, with many more variables to consider depending on your specific situation. If you want to ensure that your business has appropriate redundancy procedures that follow the Employment Rights Act 1996 and put the needs of your employees first, Trusted HR is here to help. Whether it’s an HR or legal issue, problem or project, our team of professional HR consultants can assist you.

Whether you need short, medium or long-term support, our service is the ideal solution. We provide valuable, professional consultancy to a range of organisations across the UK.

We can help with:

• Employee Contracts and Handbooks
• Change Management
• Organisation Design and Development
• Employee Wellbeing
• Absence and Performance Management
• Conflict Resolution
• Managing Conduct
• Management and Leadership Development

Request a consultation to learn more about how our consultancy service can help your organisation succeed. Trusted HR offers a free, 45-minute, no-obligation consultation on any HR issue to help you get started.