Share Article: Obligations to Employees in Redundancy situations

Many employers will be aware of the ability to make an employee redundant if there is no longer a need for their job. Redundancy is a (potentially) fair reason to terminate employment but can leave organisations open to claims of unfair dismissal if badly handled. Click this link for more information on our Redundancy, Restructuring and TUPE legal services.

Redundancy is where

  1. The employer is no longer carrying out the business for the purpose of which the employee is employed
  2. The employer is no longer carrying out the business in the place in which the employee is employed
  3. 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

Where an employee’s role is redundant there may be suitable alternative employment, either in a different role or different location. If so, the employee is not entitled to a redundancy payment unless it was reasonable for them to refuse the alternative employment. If an employer does not offer an alternative vacancy that is suitable, they are open to a claim of unfair dismissal.

If there is more than one employee doing work of a particular kind but no need to make all of them redundant, it will be necessary to carry out a selection process to determine who stays. This is done by identifying a pool of those employees from whom the selection will take place, drawing up selection criteria and then selecting those with the highest “score”. Selection criteria should be as objective as possible. Care should be taken to ensure that they are not either directly or indirectly discriminatory.

In restructure situations, it is often the case that a large number of employees are technically redundant but that there are also a large number of alternative positions. Many employers take the approach of placing all such employees at risk and inviting them to apply for the alternative positions. This is perfectly legitimate, provided that the process of appointment to those positions is itself fair.

A redundancy will be unfair unless the employer has consulted with the employee. There should be consultation over possible alternatives to redundancy, the choice of pool, the method of selection, the criteria to be used, an employee’s scores and any possible alternative employment. Consultation should be meaningful, though an employer is not bound to take the employee’s suggestions on board. Larger scale redundancy exercises require collective consultation and notification to the Secretary of State.

Once redundancy is confirmed, employees will be entitled to

  1. Their contractual or statutory notice (or payment in lieu).
  2. A redundancy payment. Statutory redundancy payments can be calculated using the online calculator. Employers may have their own policies giving more generous packages. If a particular formula has been used on several occasions, this may have become contractual by way of custom and practice.
  3. Time off to look for alternative work or arrange training for future employment

Assessing whether or not there is a redundancy situation and carrying out a fair procedure can be complex. This blog gives a broad overview of the process but cannot go into detail about each and every possible scenario. Contact Louise Taft for advice on your particular circumstances

020 7935 3522

Whatever your personal circumstances the above is only a guide and we would advise you to contact us to obtain definitive advice as you will appreciate that each person’s circumstances are unique to them.

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