Genuine redundancy situations occur under three circumstances:
- Business closures;
- Workplace closures and
- Reduction of workforce.
If the above criteria are not met the employer must proceed with caution because an employee may make a claim for unfair dismissal even if a proper consultation and dismissal procedure is followed.
Is there a qualifying service requirement for bringing an unfair dismissal claim?
To proceed with a claim for unfair dismissal, the claimant must:
- Be an employee and not an independent contractor or self-employed and
- Have been employed by you for the minimum qualifying period of service (though this requirement is subject to exceptions):
- If employment began before 6 April 2012, they will need to have one years’ service.
- If employment began after 6 April 2012, they will need to have two years’ service.
What would be considered a fair redundancy procedure?
Businesses should approach redundancy procedures in the following way:
- First consultation meeting: meet the workforce as a group and explain the reasons for the redundancies.
- First Letter: confirm the information given in (1) above in writing; include the selection criteria and scoring guidelines (if any).
- Score employees: ensure a selection of objective and subjective criteria is used in your scoring matrix (i.e. performance).
- Second Letter: write to employees who have provisionally been selected for redundancy and invite them for a meeting to discuss their provisional selection. Include an invitation, allowing them to be accompanied by a colleague or trade union representative.
- First individual meeting: consult with employees individually about their scores, selection for redundancy and terms of the redundancy. Allow them to be accompanied by a colleague or trade union representative.
- Follow up: after the meeting at (5) above, follow up on any of the employees’ suggestions to avoid redundancies.
- Second individual meeting: where a decision to make an employee redundant is made, invite them to a further meeting and talk them through the redundancy package. Again allow them to be accompanied by a colleague or trade union representative.
- Dismissal letter: write to the employee confirming the decision to make them redundant and specify the termination date and calculation of their redundancy payment. Explain their right to appeal the decision.
- Appeal: if the employee appeals, invite them to attend a further meeting to hear the appeal. Allow them the right to be accompanied by a colleague or trade union representative. Following the meeting, write to the employee confirming the outcome.
You should always ensure that all meetings are minuted. The above guidelines are generic and you should always take specific advice from us or another qualified professional.
How do I calculate the statutory redundancy payments?
Only employees with two years’ service are entitled to redundancy pay.
The amount of redundancy payment is based on the employee’s age, length of continuous service and gross average wage at the date of when redundancy occurs. This is worked out as follows:
- Half a week’s pay for each full year if the employee is under 22.
- 1 week’s pay for each full year the employee is 22 or older, but under 41.
- 1.5 week’s pay for each full year the employee is 41 or older.
There is a cap on the weekly pay, this is currently set out £450 a year (it changes on the 1 February every year).
Employees who are successful in their claim for unfair dismissal can request reinstatement (returning to their old job) or compensation, though they will have to make every attempt to find alternative employment.
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