Do employer's need a formal redundancy procedure?

A formal redundancy procedure is helpful for businesses because it ensures fair treatment for all employees across the company.

One should only be created after consulting appropriate redundancy legal advice.

Where one is implemented, it should be highlighted to all employees, included in the employee handbook and all subsequent redundancies must comply with it.

The employer should seek evidence that all employees have the policy.

The policy should refer to the creation of a business case to show why redundancies are being considered.

Remember, redundancies do not always come about because of a lack of work; a restructure within a thriving business where job roles are consolidated can still result in a fair redundancy situation and this would be the focus of the business case.

It is important that measures alternative to redundancy are sought so this should also be pointed out in the policy. Consultation with employees is an extremely important element of a redundancy procedure so your policy should set out how this consultation will take place, and who with.

Bear in mind that trade unions may need to be involved in the consultation, or workforce representatives.

If there are no appropriate workforce representatives, you should include in your policy the requirement to hold elections to choose who will represent the workforce and take part in the consultation on their behalf.

Timescales should be included, and this should factor in any variances in the legislation which require minimum consultation periods.

You may also want to consider including in the policy examples of the criteria that employees will be scored against if the redundancy situation requires only some employees within a group to be selected for redundancy.

Be careful which criteria you use – reliability and attitude could be too subjective to use as the only criteria. Instead, use something which is measurable such as sales figures, or performance against monthly targets.

The policy should also set out how selection pools will be defined. Identifying those who will be responsible for undertaking the scoring and selection would also add to the policy, which may be different for different parts of the business.

The policy should refer to a search for alternative work within the business for those who have been selected for redundancy, together with an explanation of the right to a trial period in a new suitable alternative role.

The right to statutory redundancy pay should also be set out, including the impact that refusal of suitable alternative work will have on it.

Showing how redundancy pay is calculated would assist employees in understanding that they could expect if made redundant.

For further clarification on this issue, please call our Advice Service on 0800 028 2420.