There are many reasons why you might find it necessary to make your staff redundant. A staff member can only be made redundant if the job role they work in is no longer needed. Examples may be because the company itself is closing down or that you are restructuring staff. For the redundancy to be valid, you must be able to prove that the job will no longer exist after the redundancy.
Making a redundancy
There are two ways that you can manage redundancies within your company – they can be compulsory (where you tell people that they are being made redundant) or non-compulsory (where you ask people to volunteer to be made redundant).
If you are choosing the employees who you will be made redundant through a compulsory process, you need to ensure that you are selecting people fairly and not discriminating against them. If an employee considers their redundancy to be discriminatory, they will be able to bring legal action against you.
When considering which employees to make redundant, you might consider:
- how long they have been working at the company
- employee performance
- disciplinary record
- skills and qualifications
Some redundancies may automatically be considered to be unfair. For example, making someone redundant because they are pregnant or because they are disabled.
If you offer employees the opportunity to take voluntary redundancy, you must again be fair in the way you select your redundancies. If you decide to offer early retirement as an incentive to staff, you need to offer this to all staff and not single out individuals as this could be considered to be discriminatory.
When considering redundancies, you must have a ‘consultation stage’ with the staff and their union representatives. Once you have been through a consultation stage and announced your plans, the staff must be given the correct period of notice. This varies depending on how long they have been employed by the company. For staff who have been working with you for up to two years, you must give a week’s notice. For staff who have been working with you for 2-12 years, staff must have a week for every year worked. Staff who have worked for 12 years or more need to be given 12 weeks’ notice.
You will need to make statutory redundancy payments for those staff who have an employment contract and who have been working continuously in your company for 2 years. Employees who opt for early retirement and volunteer for redundancy are not eligible for a payment.
You may choose to offer redundancy pay to those who have been working for less than 2 years but there is no requirement for you to do so. You may also choose to offer more than the statutory amount – again this is your prerogative. The statutory amount of redundancy pay is worked out in the following way.
- For staff aged 41 years or more – 1.5 weeks pay for each year they have worked.
- For staff aged 21 years or more – 1 week pay for each year worked.
- For staff below the age of 22 years – 0.5 weeks pay for each year worked.
The process of redundancy can be daunting and it is important to ensure that you follow all the correct procedures to avoid staff taking legal action for unfair dismissal. If you think you need to make redundancies in your business, get in touch and we can guide you through the process to ensure that you can make redundancies fairly and in a way that satisfies all statutory requirements. For a confidential consultation, call our team now on 0800 048 5764.