The Rules of Redundancy

Increased levels of redundancy are an inevitable effect of the economic downturn that the world is currently experiencing. Some industries are proving to be stronger than others during tougher trading times and redundancies are typically occurring in sectors where demand for goods or services is diminishing.

Whether you are an employee or employer, it is important to keep yourself informed of the law surrounding redundancy and how it affects you.

When it comes to notifying and selecting employees for redundancy, the process must be carried out in a fair and consistent manner.

First and foremost, consulting employees on the situation surrounding redundancy selections makes the whole process easier for everyone. UK law states that if an employer proposes to make twenty or more employees redundant within a period of ninety days or less, employees have a right to be collectively consulted.

In cases that fall below the twenty-employee threshold, employers are not legally obliged to consult employees during the redundancy consultation and notification phase. It is, however, advisable to keep employees informed regardless of how many redundancies are planned, from both a best practice point of view and to minimise unfair dismissal claims.

Unfair dismissal claims can arise if employers fail to warn and consult individual employees who are to be dismissed, fail to apply an appeals procedure or unfairly choose employees to be made redundant, as well as many other reasons.

To make redundancy selection as fair as possible the method of identifying employees for dismissal should be as objective, clearly and accurately defined and consistently applied. It helps for employees and employers to know that selection criteria can include factors such as accurate attendance and disciplinary records, skills or experience and standard of work performance.

Once employees have been properly informed of impending redundancies and employees to be made redundant have been selected, the factor of redundancy payments needs to be addressed.

Employees are entitled to redundancy payments if they are dismissed for redundancy reasons - such as but not necessarily, business performance, reorganisation, reduction in requirement for the work or technical advances - so it's worth checking legislation to be sure of each stipulation and if it is applicable to you. Some groups of employees are not entitled to redundancy payments so again, check what the law says with regards to to know where you stand.

A redundancy payment is due only if employee has at least two years’ continuous service. Redundancy payments are also dependent on age; those under 22 are entitled to half a week’s pay for each year of service, those between 22 and 41 get one week and anyone over 41 receives one and a half weeks' pay for each year worked after the 41st birthday.

As any sort of organisational change can be disruptive, good communications between management and employees can help everyone to get through redundancy processes with the minimum of disruption.

Seeking redundancy advice is another easy way for employees and employers to ensure redundancies are carried out fairly and everyone is kept on the right side of the law.