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Redundancy process five essential steps

Published 31 October 2022

Unprecedented financial challenges and economic uncertainty facing employers means the spectre of redundancies is never far away.

Businesses of all shapes and sizes are being forced to adapt, plan and restructure operations just to survive.

The cost of living crisis is not just affecting the consumer, it is having a disturbing impact on many employers providing to customers too.

As people battle desperately to keep up with the rising costs of heating, eating and filling up their cars, many businesses are having to make, or at least think about, plans that can ensure they stay afloat.

It means that job losses and small and large scale redundancies seem almost inevitable.

A genuine redundancy situation is where an employer requires fewer employees or is closing its workplace [1 cited 31.10.22]

As an employer if you get the redundancy process wrong you run the risk of an employment tribunal claim.

An employee who has two years’ service or more could make a claim for unfair dismissal [2 cited 31.10.22]. Or if you select someone based on a protected characteristic covered by the Equality Act 2010 e.g. age, sex, religion or a disability, they could make a claim for discrimination [3 cited 31.10.22]

If you are thinking about redundancies, or planning to make them, here are five essential steps to ensure you get the process right - and avoid costly ramifications.


Step 1 – Clearly explain the reasons for redundancy and the process

Conduct a thorough review of your business to determine which roles are at risk of redundancy, and inform employees.

Consider alternatives to redundancy e.g. offer voluntary redundancy, change working hours or move employees into other roles

Good communication is key throughout the process, so inform staff of any selection criteria you will use [4 cited 31.10.22]

Be open and transparent about the process and deal with all reasonable requests for relevant information in a fair manner.


Step 2 – Consultation

Hold genuine and meaningful consultation meetings with staff to discuss the situation [5 cited 31.10.22 ] . Listen and reasonably consider any concerns or challenges raised in relation to the redundancy process.

If you are making less than 20 people redundant, there is no minimum time for a consultation. If  20 to 99 employees are being made redundant, allow for a minimum 30-day consultation period and 45- day period if more than 100 redundancies.

You should meet each affected employee in private, at least once. It is good practice to allow an employee to be accompanied at any consultation meeting.


Step 3 – Explore alternatives to redundancy

Consider moving an affected employee to a suitable alternative role within your business. Also listen to and consider any proposals from an employee re alternatives to redundancy.

The individual has the right to a four-week trial period in a suitable alternative role. If the role is unsuitable or the employee turns it down they will be entitled to redundancy pay [6 cited 21.10.22]

If there is no valid reason for the employee to refuse the role, you could refuse to pay their redundancy pay.

But be careful because you will need to be able to prove the rejection of an alternative role was unreasonable if they make a claim to an employment tribunal.


Step 4  - Redundancy dismissal

If you have conducted a fair process and there is no other reasonable option, confirm the dismissal.

Provide written confirmation of the decision and include details of the leaving arrangements and redundancy terms. The letter must inform the worker of their right to appeal the decision.

Remember, the employee is entitled to their contractual or statutory notice, whichever is the greater [7 cited 31.10.22]

If you require an employee to work their notice, you should continue looking for alternatives to redundancy and notify the individual of any suitable vacancies that come up even after you have issued notice.

Step 5 – Redundancy appeal

Listen carefully and consider fairly any reason why the employee believes the decision was unfair.

The appeal gives you the opportunity to address and correct anything that may have been unfair, resolve the matter without the need for an employment tribunal or to be able to demonstrate to a tribunal you conducted a full and fair process.

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