There are many reasons why a business may take the strategic decision to downscale and reduce the number of employees. For example, closures of certain sites from which the business operates can mean that if staff cannThere are many reasons why a business may take the strategic decision to downscale and reduce the number of employees. For example, closures of certain sites from which the business operates can mean that if staff cannot be relocated to a different site, then redundancies could be required. Or, if the financial performance of the business is suffering, the management team could decide to cut staff numbers to try to minimalise financial losses.
Although it is common to act on impulse when the business is compromised, it is important for employers to not make any rash decisions. To ensure they are not liable for unfair dismissal claims, businesses must give employees as much prior warning of the situation as possible. Whilst there are no fixed rules when it comes to defining which employees are at risk of dismissal, employers will have to prove that they have made their selection based upon reasonable circumstances.
Employees must be made aware of the risks and redundancy proposals at the earliest instance and the reasoning behind these plans. This should be done in the form of redundancy consultation meetings. To ensure employees fully understand their rights, during these consultation meetings it would be wise to debunk some of the common myths surrounding redundancies. Some of these common misconceptions are explored below:
Redundancies can be made on account of performance
A common misconception surrounding redundancies is that an employee can be made redundant as a result of performance concerns. In actual fact, if an employee is not performing to the expected standard then this should be handled via disciplinary proceedings – this is a completely separate issue. Employees who are made redundant due to their performance rather than a redundancy situation may raise a claim of unfair dismissal.
All employees are entitled to statutory redundancy pay
Another common myth is that all employees are entitled to statutory redundancy pay if they are made redundant. This however is not the case, as employees are only entitled to this pay if they have two or more years’ service with a company. However, some businesses have their own enhanced redundancy policy, and in these instances this should take precedence.
Those employees that do qualify for statutory redundancy pay can receive a tax free payment that is calculated on the employee’s age, weekly wage, and length of service. Employees are also entitled to receive a payment based on any accumulated but untaken holidays. Holiday payments are subject to PAYE deductions in the normal way.
A person can be made redundant because of their age
There is an unwarranted concern amongst some employees that once a person reaches retirement age then they can be forced to retire. This however is not true and could result in both unfair dismissal and age discrimination claims.
A woman can be made redundant because she is pregnant
A woman cannot be made redundant because she is pregnant or on maternity leave. However, if the employee’s position genuinely cannot be continued whilst she is either pregnant or on such leave then redundancies can still be made. It is important that employers follow the necessary processes and consult with the female employee first to ensure they can prove that they have not been disadvantaged because of their pregnancy or maternity leave. If the employee can prove otherwise then she is likely to be successful in both a claim of unfair dismissal and also sex discrimination.
There are also special rules relating to an employee on maternity leave that mean that if her role is redundant she would be entitled to any other suitable alternative vacancies within the company.
Preventing unfair dismissal claims
In addition to the consultation process prior to selecting an employee’s role as redundant. To ensure the business is not liable for unfair dismissal claims, once a pool of employees have been identified for redundancy, the employer is also obliged to carry out a thorough search for alternative employment within the company. There should be evidence that this search continued up until the date of the actual dismissal. This is to prove that the business made the best efforts to find an alternative position for the employee and that redundancies were a last resort.
Undertaking redundancies is not an enjoyable process for anyone involved. However, to ensure businesses are not liable for unfair dismissal claims, then it is essential employers can explain to their employees that redundancies are last case scenario and that reasonable measures have been made to protect jobs.
Karen Bexley, partner and head of employment law at commercial and private client law firm, MLP