Understanding enhanced redundancy

Ceire Watson

December 27 2019

Our advisors are often asked about enhanced redundancy. One common question is if offering an enhanced redundancy package will mitigate the risk of a procedure.

If that question’s played on your mind, we have the answer.

Why redundancy?

The possibility of redundancy can arise for several reasons. Situations such as reduced workloads or fewer employees needed to carry out the work are common. Redundancy can also occur if the workplace is closing down completely. When an employer wishes to make an employee redundant, fair process applies.

Who’s eligible for redundancy payment?

To be eligible for redundancy payment an employee must:

  • Be working under a contract of employment, and
  • have at least two years of continuous service.

Those who opted for early retirement do not qualify. The amount payable to the employee will depend on their age and length of employment.

What’s the process?

It’s best practice to handle redundancies with great sensitivity. After all, employees are losing their financial security. When considering making an employee redundant, you must adhere to the formal redundancy procedure. 

Begin the process by holding an ‘At Risk’ meeting and follow up in writing, inviting the employee/s to a consultation meeting. In this letter, provide the employee/s with information such as:

  • The reason for redundancy, and
  • the number and categories of employees involved.

The letter should include how you plan to select employees for redundancy. Also include how you will carry out redundancies and the redundancy pay.You should then consult with the employee about the process and try to come to an agreement. You can also discuss ways to avoid redundancies or reduce the effect. After the consultation, write to the employee to give them the outcome of the consultation meeting.

They’re also entitled to the right to appeal the decision. If you fail to follow these procedures, dismissals may be unfair and could lead to an unfair dismissal claim.

What about unfair dismissal claims?

Unfair dismissal claims can cause financial and reputational damage to a business. The award will depend on several circumstances, including the procedure and policies that were in place. The reputational risk occurs as all tribunals and decisions are public.

What about an enhanced redundancy payment?

Providing an enhanced redundancy payment is at the employer’s discretion and can be mutually agreed through a settlement agreement. This can be offered before and after a full consultation process. This would be on a without prejudice basis and the employee should be given the opportunity to have this agreement reviewed by a legal adviser. This document can assist the employee in waiving their right to raise a claim.

Need our help?

If you would like further complimentary advice on enhanced redundancy from an expert, our advisors are ready to take your call any time day or night. Call us on 0800 917 0771 or request a callback here.

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