Importance of getting redundancy right

As an employer, you may be aware that redundancy is one of five fair reasons for dismissal. However, it is crucial to get the redundancy process or consultation, as it is known, right, otherwise, you could still face legal action in the Employment Tribunal. Redundancy is a complex area of employment law, and employers must be able to show that their consultation process is fair and lawful.

It is a legal requirement to consult with affected employees before making any redundancies. Employees are entitled to a one-to-one meeting, and employers must genuinely listen to any alternative suggestions or ideas that employees may have. This consultation process is extremely important and must be conducted with an open mind.

Where an employer is making less than 20 roles redundant, there is no legal timetable for consultation, but it should take place at an early stage and allow employees enough time to make suggestions and present ideas on why they should not be dismissed. Ideally, at least two meetings should take place before the decision to terminate employment is confirmed. Employers should not forget to consult with all those affected, including those on maternity or other parental leave or on long-term sick leave.

Another important factor to consider is the selection process. Unless you are removing one particular role which is unique or a whole department or team, you will need to identify a pool of people from which you then select individuals for redundancy. The choice of the pool is up to the employer, and Tribunals rarely interfere with this choice provided that the employer can show that they are not motivated by trying to achieve a predetermined outcome.

The selection process is where a matrix can be particularly helpful. A redundancy matrix is a set of objective criteria that employers can use to help them decide who to select for redundancy. It works on the basis that an assessment is undertaken considering criteria such as length of service, disciplinary record, performance, skills, and qualifications, and then providing a score for each employee. This score can then be used to fairly select employees for redundancy.

It is crucial to ensure that the selection criteria and scoring are objective, reasonable and fair. Typical selection criteria include attendance, disciplinary record, performance, skills, qualifications, and length of service. Employers can apply a weighting to each category so that some categories carry more weight than others. This should not be too complex, as the employer may find themselves having to show that they did not design it to target particular employees.

It is also important not to use criteria that may discriminate on grounds of disability or pregnancy, for example. Thus, absence relating to pregnancy or other types of family leave should not be included. Ideally, two managers should assess and score, with an average taken or some moderation of different manager’s scores. This is to avoid allegations of bias from individuals selected.

Employers must take reasonable steps to establish whether there are any other positions either within the immediate business or elsewhere if it is part of a large group. Even if such positions may be considered to be beneath the person selected for redundancy, the opportunity should still be made available for the employee to accept or decline. It is very easy for the person selected to claim later at the Employment Tribunal that if the lesser role had been offered, they would have accepted it.

It is also essential to consider the legal implications of redundancy and settlement agreements. A settlement agreement is a legally binding agreement between an employer and employee that usually involves the employee receiving a sum of money in exchange for waiving their right to bring any employment-related claims against the employer. It is important to seek legal advice before entering into a settlement agreement to ensure that it is fair and lawful.

At Winston Solicitors, our team of experienced employment law solicitors can provide advice and guidance throughout every step of the redundancy process. We can help you to ensure that you are acting fairly and lawfully and can provide you with a redundancy calculator to help you select employees for redundancy. Please contact the team on 0113 320 5000 or email employment@winstonsolicitors.co.uk for further information.