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How do I make an employee redundant?- Managing the Basics & Avoiding Mistakes

Updated: Apr 4, 2023



Managing redundancies can be tricky and working with employment law specialists is essential to make sure you carry out redundancies fairly and legally. This blog provides an overview of some of the basics linked to redundancies, mistakes to avoid and a link to our extensive video with employment law expert Oliver Pryke of Cambridge Employment Law. It's important to note that if you haven't made redundancies before, or don't understand the process, you should get an expert to support you, get in contact with us here to provide you with support.


What is employee redundancy?


Redundancy is a form of dismissal from your job. It happens when employers need to reduce their workforce. Redundancy is one of the 5 fair reasons for dismissal as laid out in the Employment Rights Act 1996. Redundancy situations might occur when;

  • the organisation is closing or intends to close down; or

  • the organisation is relocating; or

  • the work done by affected workers’ is being undertaken by others; or

  • the work done by affected workers’ is no longer required either due to a change in need or due to the introduction of new processes; or

  • ownership of the organisation is being transferred to a different organisation


What process should I go through to make an employee redundant?


1. Plan the process


It's incredibly important to spend time planning out any redundancy process. Spend time thinking through whether or not redundancies are needed is crucial, they should really be the last resort, what potential alternatives could be used to avoid the redundancy process and how you'll manage the process in a fair and transparent way need to be considered. Make sure you get any documentation that will form part of the process ready up front so you don't have to scrabble about for it at a later date.


If you have a redundancy policy make sure it's up to date and is followed as part of the process, if you don't have one make sure you follow ACAS guidance which you can see here; https://www.acas.org.uk/redundancy


2. Business Case


Write out the business case, or your business reasons for considering redundancies, and how these specifically apply to your business and your employees. Make this as clear as possible so that someone who doesn't work for your company could read the document and understand why you've considered redundancies. We'd always recommend that you provide your affected employees with a copy of your business case in the interests of transparency.


3. Placing Employees at Risk of redundancy


Once you've thought through the process, spoken to an expert and written your business case you're ready to place your affected employees at risk of redundancy. This means speaking to them and providing them with something in writing outlining that their role could be at risk. Speak to an expert about what this should include.


3. Redundancy Consultation


Consultation effectively means the organisation discussing with the employee their proposed thoughts and how any of the proposed changes could affect them. Typically during a consultation process organisations will discuss;

  • ways to avoid or reduce redundancies

  • how people will be selected for redundancy

  • any issues you have with the process

  • time off to look for a new job or training

  • how the organisation can restructure or plan for the future

The length of time that's needed for consultation when there are 19 or fewer redundancies just needs to be 'reasonable' and there's no legal definition of exactly what that means timescale-wise. As part of your planning process plan out how long realistically you'll need to properly consult with your people. Our advice is always don't rush the process, it's important that you get redundancies right the first time and that you don't make the process unnecessarily long.


Collective Consultation


There are slightly different rules surrounding collective redundancies, you can see more here; https://www.acas.org.uk/collective-consultation-redundancy


If you’re making 20 or more employees redundant, the relevant number of employee or trade union reps should collectively represent the group, or groups of employees, during the consultation process, this is known as 'collective consultation'. Employees should also have consultation meetings to discuss how the proposals to make redundancies will affect them individually.


For collective consultations, the consultation must start at least 30 days before dismissal if you’re making 20-99 employees redundant, and at least 45 days before dismissal for over 100 employees.


4. Redundancy Selection


As an employer, you must select employees for redundancy fairly and not use any selection criteria that could be classed as discriminatory. It's illegal to make employees redundant based on elements that could be considered to be discriminatory such as;

  • age

  • disability

  • gender reassignment

  • marriage and civil partnership

  • pregnancy and maternity

  • race

  • religion or belief

  • sex

  • sexual orientation

  • family-related leave – for example parental, paternity or adoption leave

  • role as an employee or trade union representative

  • membership of a trade union

  • a part-time or fixed-term contract

  • working time regulations – for example if you've raised concerns about holiday entitlement or rest breaks

  • concerns you've raised about not being paid the National Minimum Wage

  • concerns that have been raised about whistleblowing

For more information on redundancy selection watch our video here;



5. Final Decision


Once you've been through the whole redundancy process you should have the views of all your affected employees and can then decide on whether or not you need to go ahead with the proposed redundancies. If you decide to go ahead with the redundancies you'll need to ensure that you make those employees who are affected aware and also provide them with written 'notice of redundancy'. This needs to be provided in writing, make sure you speak to an expert about what should be included.


6. Notice of Redundancy


When making someone redundant, you need to follow the legal guidelines for doing so which includes making sure individuals are provided with adequate notice of their redundancy. Typically ensuring someone is provided with the right levels of notice of redundancy/ dismissal will be covered by your standard notice periods within your contracts of employment.


Statutory notice periods are listed below, just in case you need them;

  • 1 week or more for employees who’ve been with you between 1 month and 2 years

  • 1 week for each year of service, for employees with you between 2 and 12 years

  • 12 weeks for employees with you for 12 years or more

7. Appeals process


If you decide to make employees redundant they should be given the right to appeal the decision that you have made. How this works should be outlined within your redundancy policy, more guidance is available from ACAS here; https://www.acas.org.uk/redundancy


Redundancy Pay


Employees will only be eligible for a redundancy payment if they have been employed by the organisation for 2 years or more. Redundancy payments are covered by one of the last pieces of employment legislation that is heavily affected by age, you can calculate redundancy payments using the government online payments calculator here; https://www.gov.uk/redundancy-your-rights/redundancy-pay


If you plan on making enhanced redundancy payments, speak to an expert to make sure what you're planning on doing will be fair.


As well as redundancy payments (depending on an employee's length of service) and notice payments, employees will also be entitled to;

  • payments for any accrued but untaken annual leave

  • any payments for contractual bonuses that they would normally be due at the point of termination depending on the rules of the scheme

What happens with things go wrong?


When things go wrong employees may be able to take their employer to an employment tribunal. Employment tribunals are independent and make decisions around legal decisions linked to employment law. Employment tribunals hear claims where people feel that their employer, or potential employer, has treated them poorly. When a redundancy process goes wrong employees could make claims for unfair dismissal, discrimination or claims linked to incorrect or unfair deductions from pay.


Mistakes to Avoid!


1. Failing to plan correctly


A key part of managing redundancies is making sure you plan for the process. Make sure you're clear on why redundancies are needed, how you'll be managing the process and in particular that you're clear about the selection processes that you'll be using. Spend as much time as possible planning out your redundancy process and work with your HR department or employment law specialists to ensure you're doing things correctly. Importantly, make sure you are clear on what your business case is for making redundancies. It's important that these are clear and objective reasons and that you're able to clearly articulate your reasons for proposing redundancies to your employees.


2. No consulting with an open mind


When carrying out consultation meetings it's important that you listen to any concerns or views put forward by your employees and that you are open-minded in terms of potentially changing your plans if your employees put forward good enough counter proposals. Whilst you don't have to change your mind in terms of your reasons for proposing redundancies, it's important that you listen to your employees, they may well have a different perspective that you haven't considered which could impact how you manage the process. It's key that you undertake a 'meaningful consultation process' which includes listening to your employees.


3. Not following the correct legal process


It may seem obvious, but not following the correct legal process can mean potential claims at an employment tribunal including what's known as protective awards which is essentially a fine that can be imposed on companies for not consulting with employees during a redundancy process. You can find out more about protective awards here and by listening to our YouTube video below with expert advice from Oliver Pryke. A protective award isn't all you could be liable for if you don't carry out an effective redundancy process unfair dismissal and discrimination claims could also result from a poorly managed redundancy process.


4. Not taking into account those left behind


Whilst redundancies are obviously extremely difficult for those involved, it's also important not to forget about those individuals who are left behind once the process is finished. Also known as 'survivor syndrome' managing the negative impact that redundancy exercises have on those who are left behind is extremely important. According to the Institute of Employment Studies, those left behind after redundancy exercises can experience;

  • Low morale and commitment

  • Reduced job motivation

  • Lower performance and productivity

  • Greater levels of stress

  • Greater risk avoidance and slower decision-making

  • Increased absenteeism

To deal with survivor syndrome we'd recommend;

  • Having clear communication strategies to make sure that people understand what's going on, and why, without breaching confidentiality

  • Make sure that the redundancy process you go through is fair and supportive so employees are able to see the organisation acting as it should

  • Make sure that those left behind have practical support and guidance

Watch our video


Want a more in-depth guide to managing redundancy processes? Watch our YouTube video with employment law expert, Oliver Pryke, from Cambridge Employment Law to find out more on;

  • Planning for redundancies

  • Managing consultations

  • Redundancy pay

  • Avoiding common pitfalls

Additional Useful Information

You can see the ACAS guide on redundancies here; https://www.acas.org.uk/your-rights-during-redundancy


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Disclaimer

  • All information within the post is provided for guidance only; always seek your own legal advice.

  • The information with this post was correct at the time of publishing, March 2023 but may be subject to change.

References


Institute of Employment Studies, Survivor Syndrome: Key Considerations and Practical Steps, Helen Wolfe, Institute for Employment Studies, 2004

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