With Redundancies at Record Levels are Businesses Following a Fair Process?

Redundancies at Record Levels

Those people aged 25 to 34 are facing the biggest risk of losing their jobs as the number of people out of work in the UK continues to rise. 

That age group suffered a redundancy rate of over 16 per 1000 in the three months to November. This is a five times increase against the same quarter in 2019. 

The Office for National Statistics confirmed that unemployment rose to 5% from 4.9% as Covid continued to hit the jobs market, adding that some 1.72 million were without work - sadly, the highest level in five years.

That was 418,000 more than in the same period the previous year, the biggest increase since late 2009.

The sectors worst affected 

Unsurprisingly, the hospitality industry was worst hit by the rise in unemployment, followed by manufacturing. 

In both sectors, the number of people unemployed was up by more than 50,000 on the previous year.

Across all age groups, redundancies rose to a record high of over 14 per 1,000 people.

However, one sign of positivity is that job vacancies also rose, with 81,000 new openings reported in the three months.

What process should businesses follow to ensure redundancies are Fair and Proper?

Every employer should consider having a formal redundancy policy and procedure. In many organisations a formal agreement may exist between management and trade union or employee representatives. We have a selection of employment related letters and templates to help employers.

Planning

Organisations should always try to avoid redundancies and consider alternative ideas, such as natural wastage, recruitment freezes, stopping or reducing overtime, offering early retirement to volunteers (subject to complying with age discrimination law), retraining or redeployment, offering existing employees sabbaticals and secondments, pay freezes, and short-time working.

However, employers may not be able to use these suggestions without breaking their employees’ contracts of employment, so they need to take care when considering alternative approaches.

If the redundancy involves more than 20 employees, the employer must inform the Redundancy Payments Service acting on behalf of the Department for Business, Energy & Industrial Strategy (BEIS).

Identifying the selection pool 

The group from which employees will be selected for redundancy (the selection pool) must be identified carefully. It will usually consist of at least one of those who undertake a similar type of work, those who work in a particular department, those who work at a relevant location, or those whose work has ceased or been reduced or is expected to be.

If an employer fails to consult and consider a selection pool correctly, the dismissals can be legally unfair.

Volunteers

Consulting employees

Employers are required to consult individual employees and give them reasonable warning of impending redundancy. No fixed timescales exist for redundancies of less than 20 employees, but the process must be fair and sincere. Businesses should follow their own compliant policies. An employee is entitled to be accompanied at all individual consultation meetings by a trade union representative or colleague.

If 20 or more employees at one establishment are to be made redundant, collective consultations with recognised trade unions or elected representatives must start within minimum time scales

• At least 30 days before the notification of redundancies for dismissals of 20-99 employees.
• At least 45 days before the notification of redundancies for dismissals of 100 or more.
• At the start of the consultation process the employer is legally obliged to give the following information to the representatives:
  • The reason for the redundancy dismissals.
  • The number of proposed redundancies and their job types.
  • The total number of employees affected.
  • The proposed methods of selection.
  • The procedure to be followed in dealing with the redundancies.
  • The method of calculating redundancy payment.

Selection for redundancy

When the consultation is finished, the employer may need to choose individuals from within the selection pool if there are not enough volunteers for redundancy. These choices must be based on objective criteria such as:

• Length of service (only as one of a number of criteria).
• Attendance records.
• Disciplinary records.
• Skills, competencies, and qualifications.
• Work experience.
• Performance records.

Employers must take great care in choosing and applying the criteria to avoid discrimination. For example, selecting part-timers could be discriminatory if a high proportion of women are affected.

Suitable alternative employment

Employers must consider offering suitable alternative work to redundant employees. If employees unreasonably refuse suitable alternative work they may lose their entitlement to a statutory redundancy payment. Employees can have a four-week trial period in a new role. If the employer and employee then agree that the role is not a suitable alternative, the employee reverts to being redundant.

The law requires employees who have at least two years’ service to be given paid time off to look for work during the final notice period.

Dismissal and appeals.

The employer should give written notice to those selected for redundancy that they are ‘at risk’ of redundancy and invite them to individual meetings. See our template letters. At least one further consultation meeting should be held, with the actual number of meetings depending on what the employee has to say. The employer must consider any points that the employee puts forward.

Once the individual consultation is complete, the employer must decide whether the employee is to be made redundant and give a written redundancy notice. This will be either the statutory minimum notice or the contractual notice, whichever is the greater. The employer must also explain the redundancy payment calculation.

Employees should be allowed to appeal against the redundancy decision, preferably to be heard by someone not involved in the original process.

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