Redundancy
Introduction
Redundancy Index
External Links
Employers should note that new age discrimination laws will require them to review their redundancy schemes. See our notes on age discrimination for more guidancy.
Before considering taking any termination/ dismissal action or organisations should review their proposed course of action against the Procedure Check page. Note that this procedure requires managers to write to all employees before any selection procedures are initiated informing them of the procedures to be followed and inviting them to individual meetings. A second letter should also be sent after selection to arrange another consultation meeting.
It is of critical importance that informal discussions with staff concerning possible redundancy do not take place until steps 1 and 2 of the procedure check have been followed. This particularly applies to senior staff and to where compromise agreements may be used.
Redundancy is a form of dismissal. It is normally illegal to dismiss an employee unless certain conditions are met. One legal way to carry out that dismissal is by means of redundancy.
Redundancy may arise where there is a diminishing need for employees to carry out work of a particular kind. Alternatively the business may be shutting a particular site, or the whole operation.
There is a need to stress here that redundancy must arise from a business need to reduce jobs. This may be reorganisation or relocation of jobs, but redundancy is not appropriate if an individual is performing unsatisfactorily. Merely placing the label of redundancy upon the dismissal of a poorly performing individual will not change the fact that person can go to an Employment Tribunal and claim unfair dismissal.
Very often before embarking on a redundancy programme employers will seek to discuss with certain individuals if they would consider the voluntary termination of their employment. Many organisations call this voluntary redundancy. Employers should be aware there is always the risk with voluntary termination that the individual will turn round later and claim that pressure was put on them to accept termination. They can then claim unfair dismissal. For that reason in those circumstance we advise all employers to ensure that a specific agreement is drawn up between the employer and employee called a compromise agreement (see index opposite).
Managing a redundancy programme can be split into the following sections:
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Consultation
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Communication
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Selection
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Payments
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Outplacement
Each of these sections is indexed opposite. We suggest employers work through them in turn. Redundancy during maternity needs to be considered particularly - this section is indexed separately.
Separate guidance is also given upon conducting a redundancy interview.
Many small employers may view the procedures recommended in this section as clumsy and bureaucratic. The writers have huge practical experience of managing these exercises and have found that in practice they work well and strongly recommend all employers to stick to them.
Before considering taking any action organisations should review their proposed course of action against the Procedure Check page.