Understanding the redundancy process

Many people are facing job uncertainty and could be facing redundancy.  There is a set of procedures that a company needs to adhere to when it comes to redundancy, to avoid the risk of a costly employment tribunal claim. But redundancy doesn’t always have to be a negative outcome, with some individuals benefiting from accepting a voluntary package to leave their company.

Redundancy Procedure

Employers are expected to establish why there is a potential need to make positions in the company redundant and give as much advance warning of the impending redundancies as is reasonably possible in the circumstances.  A key part of a redundancy process is to consider whether there are suitable alternative vacancies within the business and offer any suitable available vacancies to the otherwise redundant employees.

Selection

In a redundancy exercise, often employers need to identify the pool of potential staff to be put at risk of redundancy.  This is usually based on those doing similar work, or those who work at similar levels.  Employers are generally free to specify criteria in the selection process.  The pool of staff must be fair and objective selection criteria adopted. There must be good reasons in justifying a departure from the criteria.

Consultation meetings

It is important part of the process to consult with the employees and conduct redundancy consultation meetings with the staff affected especially if there are a number of staff in the pool.

Alternatives to Redundancies

An employer needs to look at alternatives to redundancy and suggested examples of alternative measures that should be considered include; natural wastage, recruitment freeze, non-renewal of temporary contract staff, short time working and redeployment.  Also an employer may wish to consider offering an enhanced voluntary redundancy package which may have tax advantages to staff accepting these types of packages. Voluntary redundancy is when an employer asks a member of staff to agree to terminate their contract, in return for an enhanced sum.

Compensation

Redundancy exercises should be carefully planned and it is an important factor to determine what an employee may be entitled to on redundancy – statutory or enhanced redundancy pay, pension entitlements, outplacement help, share options and a payment in lieu of notice. A voluntary package may include an employee signing a settlement agreement which waives their general employment rights for a financial incentive.

Employers who fail to follow a fair process are at risk of creating the possibility of employment tribunal claims and this can be financially costly for a business.  However a fair redundancy process may offer some employees thinking of retiring early or moving on an opportunity to accept a package which gives them the freedom to choose the next step in their working life. Above all communication is the key to any successful process but especially relevant to a stressful situation such as a redundancy process.

This is not legal advice; it is intended to provide information of general interest about current legal issues.

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Jane Crosby

Partner, Dispute Resolution

Jane is an employment and commercial litigation solicitor of more than 15 years' experience. Prior to entering the legal profession, Jane was employed in the...

Partner, Dispute Resolution

Jane Crosby

Jane is an employment and commercial litigation solicitor of more than 15 years' experience.

Prior to entering the legal profession, Jane was employed in the aviation industry. This experience is appreciated by many of Jane's clients who note that she is able to take a commercial and pragmatic approach to any legal issue that they face.

Jane acts for a wide range of individuals and businesses and her areas of specialism include aviation, property related industries and IT. Jane regularly advises on aspects of employment law, such as settlement agreements, employment contracts, policies and procedures, redundancies, equal pay, data protection, issues arising from TUPE and reorganisations, the calculation of holiday pay, bonus and commission payments, disciplinary and grievance issues, dismissal and termination issues, the protection of confidential information and the enforcement of restrictive covenants. Jane gets involved in GDPR training for her clients and she is able to deliver tailored employment law training sessions upon request.

As a commercial litigation lawyer, Jane also deals in shareholder and directors disputes, commercial contract disputes and the enforcement of restrictive covenants.

Jane has been involved in successful high value commercial litigation for clients in the High Courts, she is an accredited mediator and she is a member of the Employment Lawyers Association.

Jane is often asked to write for a number of well known publications, including The Daily Mail, The Telegraph and The Week and she has been interviewed on BBC Radio 4.

Here is small selection of the feedback that Jane has received:

“Jane, I cannot sincerely thank you enough for your wise counsel and am delighted to have made your acquaintance. If I am blessed with a new position somewhere I will hand over my contract in the first instance to you. Likewise, any of my friends, peers, romans and countrymen wanting advice, I will point them in your direction.”

“Jane, you have been most resilient on my behalf for which I sincerely thank you for all your endeavours. I have a tremendous working relationship with Hart Brown and you have undoubtedly compounded this further."

“I appreciated the clarity of advice given at a stressful time”.

“A sensitive and highly professional approach and efficient work in the interests of the client”.

“Your advice, conduct and assistance have been indeed outstanding and very professional but also – and most importantly – very humane”.

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Hart Brown Solicitors is the trading name of Hart Brown LLP registered in England and Wales No. OC 425835 whose registered office is Resolution House, Riverview, Walnut Tree Close, Guildford, GU1 4UX and is authorised and regulated by the Solicitors Regulation Authority (SRA) No. 658593. Members: N Maud, T Pearce, D Knapp, R Campbell and P Grimwood, Partners: J Crosby, L Harrhy, J Jupp, J Lamont, T Mandelli, V McMurtrie, E Moore, S Osborne, S Powell, G Sanders and E Wiggins.

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