The general economic downturn means employers are being faced with implementing more redundancy programmes than ever in 2009.
Redundancies are caused when the business stops operating, when it relocates or if new technology is introduced.
For a redundancy to be genuine, the job that the employee does must disappear. In other words, you can still take on new staff but not to do the work the redundant employee was doing.
All companies must follow a fair redundancy dismissal procedure. All of which can lead to employment tribunal claims if not implemented properly.
Selecting employees for redundancy
With redundancies, you need to ensure that not only is there a genuine redundancy situation (within the statutory definition).
You also need to go through a full and fair individual consultation procedure, fairly select those to be made redundant and consider other options such as alternative employment opportunities before taking any final decisions.
When it comes to selecting people for redundancy, you need to use objective criteria wherever possible. This is to ensure that they are not selected unfairly.
The criteria could include, for example, attendance record, disciplinary record, skills or experience, standard of work performance or aptitude for work. For more details on drawing together a redundancy selection criteria, see ACAS’s guide to redundancy handling.
More than 20 employees
If 20 or more employees are in line for redundancy, there are also complex statutory collective redundancy consultation obligations to comply with, which involve also consulting with trade union or workforce representatives and notifying the Government on an HR1 Form. You can download an HR1 Form from the Insolvency Service website.
Unfair?
If an employee has been employed for a year or more, they can claim unfair dismissal if the redundancy is unfair. Breach of the collective consultation obligations can result in a protective award of up to 90 days’ pay for each employee.
At the moment, legal firms specialising in employment legislation are giving more advice on redundancies than on any other legal topic.
Lay-offs and short-time working
With lay-offs and short-time working, you need to ensure this is implemented in exercise of a contractual power to do so (this might be in an incorporated collective agreement) or with the employees’ express agreement. Otherwise, there is a risk of a constructive dismissal claim if the employee resigns as a result and they have been employed for a year or more.
Even if employed for less than a year or the employee doesn’t want to resign, they could still bring an unauthorised deduction from wages claim because the lay-off or short time working will have resulted in a reduced salary.
Notice
In terms of the notice you must give, it depends on the length of time the employee has worked for the business.
For example, you must give at least one week’s notice after one month’s employment, two weeks after two years and three weeks after three years and so on up to 12 weeks after 12 years or more.
How uSwitch for business can help
Read our guide to budgeting for small businesses