Redundancy is one of the most complicated and stressful areas of employment law. And it’s easy for bosses to make mistakes.
Fortunately, there are ways to reduce your legal and emotional burden when choosing a role for redundancy. Here’s how…
NB Redundancy is a big topic, and we don’t have time to cover everything in this article. You can read a more detailed guide here or get redundancy advice from our employment law experts on 0800 028 2420.
Make sure your reason is watertight
Remember, it’s the roles you make redundant, not the people.
And you need to prove that you have a genuine business need to get rid of a role. Otherwise, you could be guilty of unfair dismissal.
From April 2018 to April 2019, UK workers made 11,040 tribunal claims related to redundancy. So it’s important to make your reason watertight.
One way to do this is to show how you’ve tried to avoid redundancies.
For example, if staff costs are a problem, see if you can make savings by stopping the use of temporary workers. If you no longer need certain skills, think about moving a worker from one role to another.
A tribunal will expect you to have explored every option before making a job redundant.
Pick the right role to let go
Often, there’s no way to keep a role in your business. And at this point, you need to start thinking about who to let go.
Sometimes this is straightforward. If only one person fills the position you need to make redundant, and there’s no way to move them to another role, then your choice is easy.
It gets more complicated when you need to make cutbacks to a group of workers with the same or similar jobs.
For example, if you have five admin roles, but a change in your business leaves only enough work for three, then you have a strong business case to make two of those roles redundant.
But how do you choose between your workers?
Think carefully. A tribunal will want evidence of a fair selection process.
‘Last in first out’ isn’t always best
Many businesses take a ‘last in first out’ approach, where the newest employees are the first to go. In some cases, this might be your quickest option.
That’s because workers with less than two years of service don’t have the right to claim unfair dismissal. So you can dismiss them easily.
But it’s not risk-free.
All employees have protection against automatic unfair dismissal. This is where you dismiss an employee based on a protected characteristic (such as disability, race, gender or age) or a statutory right (such as trade union membership).
So even when you have short-serving staff, it’s often safer to go through a formal redundancy process. It brings better results for your business, too…
Get better results by judging staff performance
Another option is to base your choice on the skills and qualities most important to your business.
This means scoring your employees based on merits, such as their qualifications, performance or disciplinary records.
It might seem like more work compared to ‘last in first out’, but it’s worth it. You get evidence to fight claims of discrimination, and you keep your best workers.
Plus, it gives you confidence that your choice is fair, objective and the best one for your business.
Give the right redundancy pay and support
Once you’ve made your choice, you need to inform your employees in writing.
You should have consulted your staff at each step of the process, so your final decision shouldn’t come as a surprise.
And while redundancy isn’t an enjoyable experience, there are ways to make life easier for you and your workers.
For example, instead of making employees work their statutory notice period, you may choose to give them pay instead of notice.
If that’s not an option, then your employees have the right to take a reasonable amount of time off to look for a new job. You may even want to help by arranging training in CV writing or interview techniques.
Remember, you only need to give statutory redundancy pay to employees that have worked for you for two years or more. The amount is based on your employees’ ages, lengths of service and weekly pay.
Reduce your legal risks
There’s no way to totally remove the risk of an employee making a claim against you. But you can take steps to cut out mistakes and protect yourself against tribunal costs.
Before you make a redundancy, make sure you have processes and plans in place.
These provide a step-by-step a guide to making a redundancy, covering the points made in this article and many more that we haven’t had time to mention.
Finally, think about tribunal support and insurance for your business. This may cover your legal costs if the worst happens and a worker makes a claim of unfair dismissal.
Get expert advice
Making redundancies is one of the most stressful tasks you ever have to do as an employer. When you need help, call our employment law experts on 0800 028 2420.