The stark realities of modern business mean that cutting labour costs is often the only way to keep a company going. If you are a business owner or manager who is trying to cut your company’s costs, you may be considering a redundancy programme. However, it is important to seek redundancy advice before instigating the process, as mistakes can lead to claims of unfair dismissal or discrimination on the grounds of age, sex or race.
Are there legal grounds for a redundancy programme?
The first task to negotiate when considering a possible redundancy programme involves establishing legal grounds for such a drastic course of action. This can be a tricky process, but employment lawyers can help you to determine whether grounds of redundancy exist within your organisation.
Selecting candidates for redundancy
The next stage of a redundancy programme involves formulating the fairest possible selection procedure. You need to be consistent and fair in your approach – something expert employment solicitors will be able to help you with. Potentially justifiable reasons for making employees redundant include:
- Qualifications and skills
- Record of performance
- Absence history
- Disciplinary records
Another common criterion for redundancy selection is length of service. However, this should be used with great care, as it could leave you open to allegations of age discrimination.
Navigating the consultation process
The law requires that you consult with your employees before making any redundancy selections. If you fail to do this, or your consultations are deemed to have been inadequate, you could be susceptible to claims of unfair dismissal.
If you intend to make more than 20 of your employees redundant within 90 days of announcing consultations, you will need to abide by collective consultation guidelines. These include consulting with an employee representative – who should be an employee rep or a trades union rep. These consultations must include ways to avoid redundancies, how to keep them to a minimum and how to mitigate the effects felt by employees – such as offering retraining.
While there is no time limit involved in collective consultations, redundancy programmes involving between 20 and 99 potential redundancies should begin at least 30 days before the first round of dismissals. Where more than 100 employees are affected, however, consultations must commence at least 45 days before the first dismissals are due to be processed.
Final pay and notice periods
Once you have successfully applied the chosen selection criteria for redundancies, you should notify those affected in writing, giving them the requisite amount of notice.
Your employees may be entitled to notice pay, which may be paid in lieu if there are provisions for doing so in the contract of employment. So, if you would rather that the affected employees left immediately, you have the option of paying them their statutory notice pay throughout their notice period or in advance.
As well as being liable for any contractual obligations relating to redundancy, you may be liable for statutory redundancy payments. If any of the affected employees have more than two years’ service, they will be entitled to statutory redundancy payments based on a range of qualifying criteria.
- Employees are entitled to half a week’s pay for every year of service completed under the age of 22.
- A week’s pay for every continuous year of service completed between the ages of 22 and 41.
- A week and a half of full pay for every continuous year of service completed over the age of 41.
However, employment lawyers should be able to help you avoid statutory redundancy payments that aren’t required by law. Such scenarios include:
- Employees who have turned down alternative employment without a valid reason
- Employees who have been given the chance to remain with your company
- Apprentices who have not completed their training
- Short-term lay-offs (less than four weeks)
- Merchant seamen
Redundancy programmes offer companies the chance to cut labour costs in order to remain profitable and viable. However, they also pose a risk to businesses, as they can leave employers open to claims of unfair dismissal or discrimination. Consulting with employment lawyers before you undertake such a drastic step will minimise the risk of being the subject of legal action from disgruntled former employees.