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Business Employment Law

Redundancy Advice for Employers

Dismissing employees as redundant is a tough and challenging decision to make, especially recognising the disruption it can cause to their lives. When it comes to redundancy, there are many legalities involved, so pursuing redundancy legal advice from a professional is essential.

Not carrying out a fair redundancy process can result in potential issues, such as an employee making an employment tribunal claim that can be costly, time-consuming and damaging to a business’s reputation.

Collectively, the team has extensive experience of assisting employers with various types of redundancies, from those more straightforward affecting fewer employees to larger-scale redundancies, particularly where a business has had to close. With the assistance of our employment Solicitors, you can be confident that everything will be completed effectively and efficiently. 

At Roythornes, our employment team can advise in respect of all types of redundancy matters, including:

  • Formulating a fair procedure for selection of employees for redundancy
  • Advising and guiding on the redundancy pool and consultation process, including the different types of consultation required
  • Preparing settlement agreements

Get in touch with our professional redundancy advice solicitors

For further information about redundancy, get in touch with our employment law Solicitors in AlconburyBirminghamNottinghamPeterborough or Spalding.

Our redundancy advice expertise for employers

Formulating a fair procedure for selection of employees for redundancy

When choosing employees for redundancy, it must be done in a fair way. Employers are required to apply fair and reasonable criteria for selection which will often look at a combination of performance, skills, qualifications and experience, attendance record, disciplinary record and more. You cannot choose employees based on a ‘protected characteristic’ e.g., age, gender, disability or pregnancy.

Our team of professional redundancy Solicitors will help you to choose employees whose roles are made redundant, ensuring as far as possible that the selection is fair, to mitigate the risk of a tribunal claim.

Advising and guiding on the redundancy pool consultation process

In a redundancy situation, there are a number of procedures that need to be followed, including the consultation process.

There are two types of redundancy consultations that our Solicitors can assist with, including:

Individual consultation – This is where fewer than 20 roles are at risk of redundancy.

Collective consultation – This takes place where more than 20 employees are at risk. This is known as a collective redundancy and will require a collective consultation.

Our Solicitors can ensure you have a solid foundation in place which will help to minimise the potential risks of an employment claim. We have helped many businesses with their redundancy procedures, providing practical guidance and clear, tailored advice in plain English.

Preparing settlement agreements

A settlement agreement is available for employers to use as an alternative to going through the standard redundancy procedure, potentially saving time and expense. A settlement agreement can also help to protect the business from any future employment tribunal claims: it is a legally binding document that waives the employees’ rights to make an employment tribunal claim. Not all employees will accept a settlement agreement, instead wishing to proceed with the standard route.

Our Solicitors can assist with deciding on settlement agreement terms and putting them forward to employees who are at risk of redundancy. We can further assist with any negotiations and counteroffers, helping to find an agreement that best suits the needs of the business.

How redundancy works

What is a fair redundancy process?

The law does not set out any process that must be followed when it comes to redundancy other than having a fair selection process and ensuring employees’ rights are met. Many employers will set out their redundancy procedure in their employee handbook, so it’s important to try to follow the process that is already stated by the business.

How do I select employees for redundancy?

Employers must undertake a fair redundancy process when choosing to dismiss employees by reason of redundancy, otherwise, they could be faced with employment tribunal claims which can be costly, time-consuming and damaging for the business. There are, however, certain types of redundancies where this is not required, such as where the business is closing completely and all employees are being made redundant.

A fair redundancy selection is often decided through the following:

  • Asking for volunteers
  • Performance and ability – whether employees are performing well, meeting deadlines, etc.
  • Attendance records – disability and pregnancy-related absences should not be taken into account for this
  • Disciplinary records
  • Skillsets, qualifications and/or experience
  • Length of service – usually a last in, first out approach is used. However, it must be paired alongside other criteria too, and usually will only be used as a tie-break where two employees have the same score but only one role is to be made redundant.

When choosing the selection criteria, the employer should take into account the needs of the business going forward.

What are employees’ redundancy rights?

When it comes to dismissing employees as redundant, employees have the right to:

  • Reasonable time off work to find a new job or arrange training
  • A fair redundancy selection process
  • A redundancy consultation
  • The ability to move to an alternative role in the business if one is available
  • Redundancy pay (but only those employed for longer than 2 years are eligible).

How much notice do I need to give employees?

Employees are entitled to receive notice if they are selected for dismissal by reason of redundancy. The notice period that employees are entitled to receive will either be as set out in their employment contract or will depend on their length of service, such that:

  • Those employed with the business between one month and two years are entitled to at least a week’s notice
  • Those employed with the business for over two years are entitled to a week’s notice for every full year that they have worked with the business

There is a limit of 12 weeks’ notice entitlement.

Many employers will wish to make a payment in lieu of notice, which they can do if allowed by the employment contract, or if the employee agrees.

Are employees entitled to redundancy pay?

Not all employees are entitled to statutory redundancy pay. It will depend on the length of continuous service the employee has with the business and other factors. As a minimum, to receive statutory redundancy pay, the employee must have continuously worked for 2 years.

If employees meet the criteria, they will receive statutory redundancy pay unless their contract provides for more generous company redundancy pay.

Who won’t receive statutory redundancy pay?

There are certain individuals who will not be entitled to receive redundancy pay, including:

  • Anyone who has worked with the business for less than 2 years
  • Self-employed workers
  • Police officers
  • Members of the armed forces
  • Crown servants, parliamentary staff or holders of public office
  • Domestic staff employed by immediate family
  • Employees of a foreign government

How much redundancy pay will employees get?

The amount of statutory redundancy pay that an employee will receive depends on the age of the employee and their gross pay, calculated as

  • Half a week’s pay for each full year worked whilst aged under 22
  • A week’s pay for each full year worked whilst aged between 22 and 40
  • 1.5 week’s pay for each full year worked aged 41 and over

Statutory redundancy pay (SRP) is calculated so that, at current rates, a week’s pay cannot exceed £571, and the number of years in the SRP calculation cannot exceed 20.

The maximum figure for SRP is currently 20 x 1.5 x £571, i.e. £17130. This sum is paid to the employee without deduction of tax and National Insurance.

Why choose Roythornes’ redundancy advice solicitors?

We understand how difficult the redundancy process can be for all parties involved, with many legalities to follow along with providing your affected employees with sensitive support. Our team are on hand to provide their practical guidance and advice, ensuring the process runs smoothly and in the best interests of everyone involved.

We are proud to be acknowledged by the Law Society Lexcel accreditation, which recognises our commitment to providing top-quality practice management and client care, having also received the Customer Service Excellence award.

Get in touch with our redundancy solicitors

For further information about redundancy, get in touch with our Employment team in AlconburyBirminghamNottinghamPeterborough or Spalding.