Redundancy – A quick guide to a fair procedure

Many employers think of redundancy as just another reason for dismissal and whilst redundancy is indeed a potentially fair reason for dismissal, it is in itself a separate legal being complete with its own procedures and legal definitions.

So, what is redundancy and where do employers go wrong? Redundancy is defined by section 139(1) of the Employment Rights Act 1996. The definition is relatively wordy and has given rise to much case law on its interpretation. When considering the definition and whether a redundancy has arisen what employers must remember is that it is the position you make redundant, not the person. Failure to remember this can often give rise to a claim of unfair dismissal or discrimination.

Not only must an employer ensure that the requirements for a genuine redundancy situation are met before dismissing an employee in this way, they must also be sure to follow the correct procedure.

If an employer seeks to make 20 or more redundancies within a 90 day period specific time frames are imposed by legislation and the Secretary of State may need to be notified. If fewer redundancies are proposed a fair procedure must still be followed; this is the “consultation process”. A brief outline of what may be deemed a fair procedure is outlined below:

1. Hold an Initial meeting – employees should be informed that their positions are at risk of redundancy.
2. Send a letter to employees confirming their positions are at risk and invite them to a formal meeting.
3. Hold a formal meeting whereby employees can make representations.
4. Due consideration must be given to representations made and alternative options proposed.
5. The employee should then be formally informed of the decision reached.
6. Send a final letter to the employee confirming the decision, termination date, redundancy package being offered and their right to appeal.

Whilst this may seem a protracted process, especially for small employers for whom it may be apparent there is no alternative to redundancy, by following a fair procedure an employer can drastically reduce the likelihood of a successful claim being brought against them.

There are options available to employers looking to dismiss employees, some of which are dealt with in the articles of this newsletter. However, it is imperative that an employer ensures they are implementing these options and procedures correctly as failure to do so may lead to a costly and time consuming claim. If employers are in any way uncertain as to how to proceed they should seek legal advice before taking action.

You can obtain further information and a more detailed overview of the above topics at our Crane & Staples Employment Seminar.