Quickpoints
Managing Redundancy Dismissals - Guidance for Employers
7th October 2008
Going through a redundancy procedure can be a daunting prospect, as it involves a certain
amount of sensitivity and a fair amount of legal knowledge.
Making people redundant is a last resort. Before doing that you need to consider what else
you could do. These may include:
• Restrictions on recruitment;
• Retraining and redeployment to other parts of the organisation;
• Reduction or elimination of overtime;
• Introduction of short-time working or temporary lay off (where this is provided for in
the contract of employment or by an agreed variation of its terms);
• Seeking applicants for early retirement, or voluntary redundancy; and
• Termination of the employment of temporary or contract staff.
If you think you might need to lose staff for economic reasons you need to consider whether:
• There is a “redundancy” situation, within the legal definition; and if so
• The practical steps you must take to carry out a fair redundancy procedure.
Definition
The definition of “redundancy” is very technical but broadly there are three types of
redundancy being where:
• The business is closing; or
• The workplace is closing; or
• Fewer employees are needed
Practical steps
If there is a genuine redundancy situation you may be able to dismiss staff as a result. But
you will need to follow a fair procedure. You may have a formal redundancy policy on
redundancy and if so you should usually use it.
As a minimum you should:
• Warn and consult all affected employees (or in some circumstances their
representatives).
• Adopt a fair basis on which to select for redundancy.
Consultation
You are obliged to consult with potentially redundant employees. The idea of the consultation
is to look for ways to avoid the redundancy, to look at redeployment to suitable alternative
employment, and generally to minimise the impact of the redundancy situation as far as
possible. You should:
• Begin consultation with employees as early as possible;
• Ensure that is lasts long enough to be effective; and
• Use the knowledge of employees to make better decisions.
Selection
• Agree a fair selection criteria in advance; and
• Apply them consistently across the appropriate pools for selection.
Particular care should be taken to ensure that selection criteria are not directly or indirectly
discriminatory on grounds of sex (including pregnancy or maternity leave), age, marital status,
race, disability, sexual orientation, or religion or belief. For example, selecting part-timers for
redundancy may amount to indirect discrimination against women. In such circumstances
employers must show that the selection is justifiable, for example by showing that it is not
practicable to fit part-timers (who are predominantly female) into revised shift patterns.
Re-deploy
It is important for an employer to consider alternative employment for potentially redundant
employees to ensure a fair and reasonable redundancy procedure.
Redundancy payments
Statutory redundancy payments only need to be made to employees with at least two years
continuous service. There is a statutory calculation based on age and length of service. Any
variation from this formula may discriminate on the grounds of age. The current maximum
statutory redundancy payment is £9,900.
Notice Period
Employees are also entitled to their contractual notice period, or pay in lieu of it.
Statutory dismissal and disciplinary procedures
The Employment Act 2002 introduced statutory dismissal and disciplinary procedures (DDPs)
from 1 October 2004. As a result employers must follow DDPs when contemplating dismissing
employees. This includes a redundancy dismissal. The DDPs are intended to provide a bare
minimum procedure for the employer to follow and failure to comply with the DDPs will make
any dismissal to which they apply automatically unfair. A failure to follow the DDPs will also
lead to an increase in any compensation awarded (whether in respect of an unfair dismissal
claim or otherwise) of between 10% and 50%.
The main steps are:
• Write to the employee telling them they might be dismissed and invite them to a
meeting to discuss the matter;
• Hold that meeting and offer a right to appeal;
• Hold an appeal meeting if requested.
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