redundancy

Before embarking on a redundancy process, it is always prudent for employers to consider whether a genuine redundancy situation exists.

 

The definition of redundancy can be found in section 139 of the Employment Rights Act 1996. A redundancy situation arises in the following circumstances:

  1. Complete closure of a business;
  2. Closure of part of a business; or
  3. If an employer has a need for fewer employees to carry out a role of a particular kind in the business.

If the reason for dismissal is for any reason other than the above, the dismissal is unlikely to be on the grounds of redundancy. For instance dismissals on the grounds of capability issues are not genuine redundancies and different procedures apply. It is important for employers to establish the real reason behind the dismissal as this will not only determine the procedure that must be followed but will also help an employer to properly defend any claims that may result following the dismissal.

The most common misconception for employers is that if they outsource a part of their business, for example their IT Services, then the employees assigned to that service at the company are redundant. This however is not the case and in those circumstances the employees will most likely be covered by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). If TUPE applies, those employees will automatically transfer to any new service provider and any dismissal as a result of the TUPE transfer will be automatically unfair.

In genuine redundancy scenarios, usually a particular role is redundant or there is a requirement for fewer employees to carry out a particular role. For example, if a cleaning company employs six cleaners and due to a downturn in business the company only requires four cleaners, a genuine redundancy may exist in that only four cleaners are required on economic grounds. However before undertaking any redundancy related dismissal, the company in this example would have to carry out a fair and reasonable redundancy process which would include a selection process and scoring exercise with the affected employees. The cleaners would have to be placed in a pool and given scores against a set of objective selection criteria. The selection criteria must be non-discriminatory and should be objective and capable of independent verification. Potentially fair criteria may include disciplinary records and performance and ability. The two cleaners with the lowest scores would then be at risk of redundancy and a consultation process should follow with them.

Also employers must remember, where 20 or more employees are being made redundant over a period of 90 days or less, an employer has a duty under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) to collectively inform and consult with appropriate employee representatives. The employer will also have to notify the Secretary of State within the appropriate timeframes.

If you are unsure as to whether a genuine redundancy scenario exists, or for any further information on this or any other employment issues please get in touch.

 


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