Redundancy
For many companies their payroll is one of their biggest costs.Therefore, if there is a downturn in work, or profits, business owners will need to consider downsizing and making redundancies.
Failure to act could put more jobs and even the business at risk.
But actioning redundancies need careful planning to ensure the correct procedures are followed and full consideration has been given to the business needs.
Failure to plan or follow correct procedures will result in the business facing claims for unfair dismissal-at a time when the focus needs to be on managing the business through these rocky times. Unfair dismissal claims will take up valuable management time and money.
Some top tips to consider:-
1) A redundancy is a dismissal. Therefore the correct procedure must be followed in order to ensure a claim for unfair dismissal. The minimum statutory dismissal procedures must be observed when a dismissal is by reason of redundancy. (The 3 step procedure)
2) Redundancy is about the work requirements of the employer not about the performance of the individual.
3) You must carry out a fair selection procedure if there is more than one person in the same or similar position. The selection must be as objective as possible and stand up to scrutiny when an employee asks ‘why me?’
4) You must consider alternatives to redundancy including alternative positions. Consider other locations and subsidiary companies. Even if the alternatives you identify have different terms (e.g. a lower salary) you should offer these where possible. It is up to the individual to decide if they wish to accept the alternative (an employee does not have to accept an alternative that is not a ‘reasonable’alternative, but the company should still consider and offer all possible options).
5) You must consult with individuals before any final decisions are made. This means that individuals will be first informed that their job is ‘at risk’ of redundancy.
6) If you are making less than 20 redundancies, there is no specific period of consultation but a minimum of 2 weeks is recommended.
7) An employee must have 2 years continuous employment before they are entitled to statutory redundancy pay.
8) An employee needs over 1 year’s service to make a claim for unfair dismissal relating to redundancy.
9) The maximum amount that can be taken into account in calculating redundancy pay is currently £330.This figure is revised every February.
10) Since Oct 2006 age limits for entitlement to redundancy pay have been removed.
11) An employee being dismissed by reason of redundancy is entitled to notice. The notice period can be worked or paid in lieu.
12) Additional consultation rules and procedures are required id more than 20 employees are dismissed in a 90 day period.
13) Part time employees have the same rights as full time, so it would be unfair to choose someone for this reason. The same procedures must be followed.
14) You must give written details of redundancy payments to redundant staff.
15)Consider laying staff off or putting them on short time working as an alternative to redundancies(or to reduce costs)-if you have contractual rights to do so. If you don’t have these provisions in your contracts of employment.
16) Workers who have reached the age of 65 can be given 6 months notice to retire them. They have a right to request to continue working which you do not have to accept nor do you have to give the reason why.