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Redundancy and the importance of getting right

Published: 

Mon 10 June, 2019

Scales

Redundancy and the importance of getting right

Redundancy can be difficult, challenging and distressing for all involved and ensuring it is done correctly is vital.

For employers it can be a delicate balancing act in making sure that those selected for redundancy are treated fairly, while the productivity and moral of the retained staff remains high.

Redundancy legislation is far from straightforward, and an employer has to know what its obligations are, including employees' rights and the correct procedures to follow.

As with any formal process getting it right is crucial. Unfairly selecting an employee for redundancy or failing to follow a fair process can lead to an unfair dismissal claim from a disgruntled former worker (1). If such a claim is successful the employee can be awarded significant compensation.

Redundancy is a time of great uncertainty and fear and it is important to ensure that communication with employees is clear and that they fully comprehend the process and the implications.

In the current climate an increasing number of businesses, including well-known names, are finding themselves in the unfortunate position of having to make or consider redundancies.

TV chef Jamie Oliver has reportedly closed 22 sites with the loss of one thousand jobs after the celebrity chef’s business collapsed (2).The business is said to have been left without enough cash to trade while in administration, meaning that all but three of its 25 eateries have closed.

The chemist Boots may close over 200 shops after it was said to have suffered what was said to be one of the most difficult quarters in its history (3). Boots is one of Britain's largest retailers, with about 2,500 shops and 56,000 staff.

With such high profile businesses facing serious problems it should be clear that any enterprise, of any size, in any sector could potentially find itself in the same position, which is why the right approach to redundancy is essential.

If a redundancy process is conducted fairly there is a much better chance that an employer can defend and justify its decision against any subsequent claim.

Redundancy generally occurs in three clear circumstances, and if there has already been, or is going to be, either: a business closure, or a workplace closure, or the organisation’s circumstances have changed and there is a reduction or proposed reduction in the need for employees (4)

A key part of the redundancy process is consultation (5). An employee is entitled to a consultation with their employer if they are being made redundant. This should be a discussion about why they are being made redundant and any alternatives to it.

If an employer is making up to 19 redundancies, there are no rules about how it should carry out the consultation. If they are making 20 or more redundancies at the same time, the collective redundancy rules apply.

Although an employee does not have a statutory right to appeal a redundancy, many employers will offer an appeal, and it is good practice to do so. It allows an employer an opportunity to review the decision, make sure it is correct and fair, and to understand the employee’s objection and what they want to resolve the matter.

An appeal also allows an employer to evaluate if there are any risks associated with the decision. If there are, it provides the ideal opportunity, where necessary or appropriate, to negotiate or settle any dispute to prevent the matter proceeding to tribunal.

The two fundamental questions to always consider is such a situation are ‘was the redundancy necessary', and 'was it conducted fairly’. The answer to both questions should be yes.

The scrapping of tribunal fees (6) nearly two years ago has made it easier for a former employee to challenge a redundancy dismissal that they believe is unfair. It emphasises why a fair redundancy approach is important.

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For free employment law advice or if you are affected or want information and support by any of the issues in this article please give us a call. 0333 772 0611

References

  1. An unfair dismissal [Internet] https://castleassociates.org.uk [Accessed on 3.6.19] https://castleassociates.org.uk/support-centre/unfair-dismissal.
  2. Jamie Oliver [Internet] https://news.sky.com [Accessed on 3.6.19] https://news.sky.com/story/1-000-redundancies-as-jamie-oliver-restaurant-chain-collapses-11725571.
  3. Boots closure [Internet] https://www.independent.co.uk [Accessed on 3.6.19] https://www.independent.co.uk/news/business/news/boots-store-closures-uk-job-losses-high-street-walgreens-a8933161.html.  
  4. Redundancy [Internet] https://www.citizensadvice.org.uk [Accessed on 3.6.19] https://www.citizensadvice.org.uk/work/leaving-a-job/redundancy/check-if-your-redundancy-is-fair/make-sure-your-redundancy-is-genuine/.
  5. Redundancy process [Internet] https://www.gov.uk [Accessed on 3.6.19] https://www.gov.uk/redundant-your-rights/consultation
  6. Tribunal fees [Internet] https://www.bbc.co.uk [Accessed on 3.6.19] https://www.bbc.co.uk/news/uk-40727400

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