Redundancy occurs when an employer needs fewer, or no, employees to carry out a certain type of work. This is most likely to happen because of a lack of funds. You may also decide to change the type of work you do.
Redundancy is potentially a fair reason to dismiss an employee, but a fair procedure must be followed before the decision to dismiss is made. If you need guidance when considering or implementing redundancies you can phone ACAS for free advice: 08457 474747. If your organisation subscribes to an HR advice service or has legal expenses insurance cover, then you should contact the service provider.
Key points for any organisation:
We recommend any organisation, (even if redundancies are not being planned) to:-
- Assess your liability for statutory redundancy pay and length of notice to which your employees are entitled and reassess it each year. You can find a Statutory Redundancy Pay calculator on the GOV.UK website. Find out more information on statutory entitlement to notice.
- Remember to check your organisation’s contract of employment to see if you have agreed to pay more redundancy pay or give longer notice than the statutory amounts to your employees.
- Be aware that planning and carrying through a redundancy process takes time, possibly several months.
- Adopt a Redundancy Policy, setting out the procedures your organisation would follow if redundancies were to be considered.
- See More Resources below for samples Policies.
Key points for handling redundancy situations:
If redundancies are being considered, you should plan the procedure carefully. Links to detailed guidance from ACAS and the GOV website can be found in More Resources below, but key points are:-
- Write down your proposals so you can consult with those affected. It will be much easier to consult if the proposals are in writing. In the most straightforward situations a short letter may be enough to set out the proposals, or if complex restructuring is being considered you may need to write a detailed report. Explain the background to the changes as well as the type and number of posts that may affected, the timetable for consultation and for making the final decision to issue notice of dismissal if redundancies go ahead. The document will need to explain which employees are in the pool for potential redundancy (it may be only one employee in the pool) and what objective selection criteria will be used to select from the pool.
- Consult with affected employees: No matter how straightforward the redundancy situation is, consultation is essential. Arrange meetings with all affected employees and make sure there is opportunity to consult with employees individually not just in groups. If you are making more than 20 redundancies you must also consult with union representatives or elected staff representatives. Consultation is an opportunity for employees to suggest ways of avoiding the redundancies or lessening their impact, and to ask questions about the procedure and their individual circumstances.
- Consider suitable alternative employment: If other job opportunities arise during consultation or after notice is issued, the redundancy may be avoided either by redeployment if there is a close match between old and new posts, or by being offered a chance to apply. Employees taking up suitable alternative employment are entitled to a trial period.
- Dismissal should be with notice, following a final meeting with the employee, to which they could be accompanied by a work colleague or trade union representative. Offer a right of appeal. During the notice period employees with two year’s service are entitled to reasonable time off to look for work or undertake training.
- Make redundancy payments to any employees with two or more years continuous service, even if on a fixed term contract.
- You can read advice and guidance from ACAS by downloading it on the ACAS website: ACAS Advisory Handbook – Redundancy Handling
- You can also work through the free ACAS E-learning session on Handling Redundancy, although you will need to register.
- You can read about Making Staff Redundant on the GOV website
- Sample policies can be obtained from PEACe, and the Pay and Employment Rights Service for a small charge and at NCVO’s HR Bank. We do not think that any sample policy can be adopted without tailoring it to your own organisation.