Redundancy & Restructuring

Redundancy is where

• The employer is no longer carrying out the business for the purpose of which the employee is employed
• The employer is no longer carrying out the business in the place in which the employee is employed
• Requirements for the employee to carry out work of a particular kind is to cease or diminish either across the business or in the place where the employee is employed

A fair selection process must be followed if there is more than one employee doing work of a particular kind but no need to make all of them redundant. There should be consultation over possible alternatives to redundancy (such as relocation, an alternative job or reduced hours), the method of selection and choice of “pool” from which redundancies will be made, the criteria to be used, an employee’s scores against those criteria and any possible alternative employment.

Bumping involves moving a potentially redundant employee into an alternative position, then making that second employee redundant. It is considered fair to do so, though not necessarily something an employer has to consider.

There is no prescribed period for individual consultation with potentially redundant employees, but consultation must be long enough, and take place early enough, to be meaningful. Short meetings over a period of days before notice is given are unlikely to be adequate.

If an employer is proposing to make at least 20 redundancies within 90 days, collective consultation is required with appropriate employee representatives. That must last at least 30 days for between 20 and 99 redundancies, and 45 days for 100 or more redundancies.

Redundant employees should be given notice in line with their Contract of Employment, or statutory notice if longer. Notice must be given after consultation is complete. Many redundant employees are offered pay in lieu of notice, or placed on garden leave during their notice period. It is however possible to ask redundant employees to work through their notice period, though you should be offered time off to look for alternative employment.

Statutory redundancy pay is calculated using the following formula:

For complete years worked aged 41 and over    1 ½ weeks’ pay

For complete years worked aged 22-41              1 week’s pay

For complete years worked aged under 22         ½ week’s pay

A week’s pay is subject to a statutory maximum, currently £525. A maximum of 20 years’ service is counted.

The easiest way to calculate statutory redundancy pay is to use the online calculator on gov.uk.

As redundancy results from a need for work of a particular kind or in a particular place to be reduced, replacing a redundant employee raises a question as to whether or not there was in fact a genuine redundancy situation and if so whether it was in fact an Unfair Dismissal. If another employee is taken on to do a different role or in a different place, but that job might have been suitable for you, you might have a claim for Unfair Dismissal on the basis that suitable alternative employment was not offered.