Employment Law Focus
REDUNDANCY
What is a redundancy?
There is a redundancy situation if an employee is dismissed because the business as a whole, or the particular workplace where the employee worked, has closed down. Likewise if there has been a reduction in the size of the workforce needed to do work of a particular kind.
Who can claim redundancy pay?
Anyone who is an employee can claim redundancy pay if they have been employed for at least two years. Employees are entitled to the following, up to a maximum of 20 years:
- up to age 21 - half a week’s pay per year of service
- age 22 to 40 - one week’s pay per year of service
- age 41 and over - one and a half weeks’ pay per year of service
There is also a limit to the statutory basic weekly pay (currently £310), although employers may offer a more generous package under the terms of the contract.
What is suitable alternative employment?
Employers have to take reasonable steps to find alternative employment that would be suitable for that employee. Otherwise the dismissal may be unfair. They do not, however, have to create a new job for them.
If the employer owns a group of companies, then they should also look in those associated companies for alternative work. The job should be of similar status and pay, but even if is not, employers should still offer it.
Did the employer act reasonably?
Even though redundancy is a potentially fair reason for dismissal, an employee may still be able to bring a claim for unfair dismissal if the employer acts unreasonably, say, in terms of the selection criteria that they adopt. The courts have said that:
- employers must give as much warning as possible of impending redundancies (and see below)
- employers should agree with the union (if there is one) the criteria to be used in selecting employees
- employers should agree criteria that can be objectively checked against evidence such as attendance records, length of service etc
- employers should ensure that the selection is made fairly in accordance with the criteria
- employers need to consider if they could offer alternative employment
What pool did the employer use for selection?
Employers need to begin the process by defining the appropriate pool from which to select the redundant workers. If there is an agreement with the trade union which specifies the pool, they should follow that.
What selection criteria should employers use?
The selection criteria must be objective and non-discriminatory. The following can be used (but note the qualifications):
Did the employer consult?
Employers have to consult with trade unions and individual employees. Tribunals will decide whether it was adequate or not on the basis of the facts before them. Employers with over 100 employees now also have to take into account the Information and Consultation Regulations 2004.
Can employees see the results of their assessment?
If an employee believes that they have been treated unfairly in the assessment process, they are entitled to see their own assessments, prior to a final decision being made. Generally, they will not be allowed to see the assessments of others who have been retained unless they can point to a particular employee who they claim should have been selected instead of them.
If the employee does not agree with the assessment, it is good practice to offer an appeals procedure.
What happens if there are more people with the same scores than jobs?
If a number of employees have been assessed as having the same score, employers need to go through a further level of selection, this time in the form of a competitive interview.
Can an employer dismiss a woman who is pregnant?
It is automatically unfair to select a woman for redundancy because she is pregnant, has given birth or taken maternity leave. This right applies irrespective of an employee’s length of service or hours of work. Any woman made redundant during her maternity leave is entitled to be offered suitable, alternative work.
Although employers have a general obligation to offer alternative work before dismissing employees, women on maternity leave must be given the first offer of any vacancy. If the employer fails to do so, they may face a claim of sex discrimination and unfair dismissal.
Did the employer follow the disputes resolution procedure?
If the employer dismisses someone for redundancy and does not comply with the requirements of the statutory dismissal and disciplinary procedures, then the dismissal will be automatically unfair. The only exception is when the employer has to collectively consult with the relevant union/s (i.e. if they are making more than 20 employees redundant).