Redundancy Process Overview

An employer must follow a fair redundancy process, and if the employee has been employed continuously for at least 2 years by the time the job ends, a failure to follow a fair process can expose an employer to a claim of ordinary unfair dismissal.  A fair procedure comprises a number of stages:

• consultation;

• fair basis for selection, including selection pool and criteria; and

• consideration of alternative employment

The employer should consider ways to avoid a compulsory redundancy situation.  This may include:

• restricting new recruitment;

• voluntary redundancy;

• retraining and transfer to other work;

• moving the affected employees to another site (if applicable);

• cost saving measures i.e. job sharing, lay off or short time working, reducing overtime, removing discretionary benefits, temporary pay reductions.

Practical Steps

The following guide is in line with what an Employment Tribunal would expect an employer to carry out, which can be tailored to suit prescribed circumstances.

1. Staff announcement / meeting – involving the affected employees, this should include an explanation from the employer for the reasons for the redundancy, the numbers / roles that are at risk, details of the consultation period and the process of selection (including reference to the criteria for assessment), and confirmation that individual consultation meetings will take place with those affected.

2. Letters issued to individual employees – confirming they are potentially at risk of redundancy, inviting them to individual consultation meetings (with the right to be accompanied).

3. Carry out a fair selection process.

4. Consider alternatives to redundancy.

5. Hold individual consultation meetings to discuss selection for (and alternatives to) redundancy.

6. Issue notices of dismissal.

7. Allow the right to appeal.

Before commencing a redundancy exercise, the employer should;

• consider approximately how long any consultation process will take;

• calculate notice costs, depending on whether the employees will work out their notice period or be paid in lieu of it;

• calculate the statutory redundancy payment costs.

Consultation

The employer must give as much warning as possible so that affected employees may consider possible alternatives to redundancy or seek alternative employment. Consultation should include:

• consultation when the proposals are still at a formative stage;

• adequate information with regards to the redundancy process;

• adequate time for those affected to respond; and

• consideration given to any responses during the consultation.

The employer is required to consult individually on;

• the individual’s selection for redundancy (to provide the individual with an opportunity to comment on the selection criteria and scores); and

• whether there are any alternatives to redundancy.

Failure to consult may render the dismissal unfair even where a fair selection criteria has been applied, as it will mean the employee is unable to discuss ways of avoiding a dismissal.

Collective Consultation

Collective consultation is required when an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. Consultation in these circumstances will need to take place with elected employee representatives or the union representatives of the affected employees. There is no timeline for how long the collective consultation must last, however there is legislation which does not permit any dismissal to take place before a set number of days after it has commenced:

• If 20-99 dismissals are proposed, dismissals cannot take place until 30 days after the collective consultation has commenced.

• If 100 or more dismissals are proposed, dismissals cannot take place until 45 days after the collective consultation has commenced.

The penalty for failing to carry out collective consultation obligations is up to 90 days’ pay per affected employee – this is known as a “protective award”. “Affected employee” covers all the employees who should have been consulted, not just those who are ultimately dismissed.

Selection Criteria for Redundancy

Employers should consider using criteria such as the following:

• attendance record (disregard any absences linked to disability);

• disciplinary record;

• skills or experience;

• standard of work performance;

• aptitude for work;

• formal qualifications and advanced skills (but not in isolation);

• efficiency

The employer should select employees for redundancy fairly and objectively on the basis of the chosen criteria.  Ideally the same manager should carry out the selection process, as inconsistency in the application of criteria may render the dismissal unfair. The employee should be permitted to contest their assessment score prior to the decision to dismiss, otherwise the dismissal could be unfair.  An employee should be provided with a copy of their own assessment.

First Individual Consultation Meeting

Matters to be covered at the meeting:

• that this meeting is confidential and no one else knows what is being discussed;

• who is attending the meeting and in what capacity;

• the reasons why the redundancies are considered necessary;

• summarise the redundancy consultation and selection process;

• confirm that no final decisions have yet been made;

• discuss the proposed selection criteria and scoring;

• when it is proposed the employee’s dismissal for redundancy (if confirmed) would take effect;

• ask whether the employee has any comments on the redundancy process, including the selection criteria and scoring;

• if collective consultation has not taken place, the options of voluntary redundancy, redeployment and compensation for redundancy;

• ask whether the employee has any suggestions to avoid redundancy;

• explain that at the end of the meeting the employer will to take the opportunity to explore any of the employee’s comments or suggestions.

Second Individual Consultation Meeting

Matters to be covered at the meeting:

• summarise the redundancy consultation process undertaken to date;

• that the employee has been provisionally selected for redundancy;

• the reasons why the employee has been provisionally selected;

• when it is proposed the employee’s dismissal for redundancy (if confirmed) would take effect;

• that no final decisions have yet been made;

• ask whether the employee has any comments on their provisional selection, i.e. their scoring;

• if collective consultation has not taken place, the options of voluntary redundancy, redeployment and compensation for redundancy;

• ask whether the employee has any further suggestions to avoid redundancy;

• explain the termination arrangements (e.g. that the employee will not have to work out notice but will be paid in lieu) and ask them if they have any questions;

• tell the employee that, if their selection is confirmed, then they can appeal against the decision if they are dissatisfied with it and explain the type of appeal and the appeal process;

• explain that at the end of the meeting the employer will to take the opportunity to explore any of the employee’s comments or suggestions.

Third Individual Consultation Meeting (if necessary)

Matters to be covered at the meeting:

• summarise the redundancy consultation process undertaken to date;
• explain (as appropriate) how the employer has considered any comments raised by the employee on their provisional selection for redundancy;

• explain (as appropriate) why the employee was not considered suitable for any vacancies they have expressed an interest in or that there were no vacancies;

• if appropriate, invite the employee to accept that all ways of avoiding redundancy have been explored and exhausted and that there is no alternative to dismissal;

• if appropriate, confirm that, there being no alternative, the employee will be made redundant, and the effective date;

• explain the termination arrangements (e.g. that the employee will not have to work out notice but will be paid in lieu) and ask them if they have any questions;

• tell the employee that, if their selection is confirmed, then they can appeal against the decision if they are dissatisfied with it and explain the type of appeal and the appeal process;

• inform the employee of any redundancy counselling or other support on offer (e.g. help finding another job);

• tell the employee that they will be given a letter setting out the financial and other arrangements relating to the termination of their employment;

Reasonable Adjustments

Throughout the process the employer should give consideration to whether reasonable adjustments need to be made in respect of any employee who has a disability.  For example:

• where the employer knows that the use of productivity and accuracy selection criteria with weightings is a provision, criterion or practice which has a substantial adverse effect on a disabled employee, the duty to make adjustments arises in the context of those particular criteria and their weightings; and

• where the employer knows that an employee is unable, as a consequence of a disability to attend meetings, the employer has a duty to make reasonable adjustments, so that the employee is not put at a substantial disadvantage of not being able to demonstrate their suitability for a post.