Redundancies and Restructuring

Redundancy is a potentially fair reason to dismiss an employee (see our guide on fair dismissals).  Redundancy situations must be handled carefully and a fair procedure should be followed so as to avoid unfair dismissal claims.

Restructuring

DC Employment Solicitors can work with your business to ensure you get it right.  We have expertise in working with what may appear to be complex situations but which can be resolved by way of careful restructuring.  As with most employment law matters, the key is to get the process right.  Our processes are robust and tribunal tested and we can work with you to limit your exposure to any claims.

Redundancy | The Meaning

The statutory definition of redundancy is such that, broadly speaking, redundancy situations fall into three categories:

  1. Business closures;
  2. Workplace closures; and
  3. Reduced requirements for employees to do work of a particular kind.

Redundancy | The Processemployer redundancy

Employers must follow a fair redundancy procedure which, for individual or fewer than 20 redundancies, will include the following:-

  • Establishing that a genuine redundancy situation has arisen;
  • Considering whether it is possible to avoid the need for redundancies, for example, by restricting recruitment, considering alternative employment, voluntary redundancy, or restricting overtime;
  • Identifying the correct pool of employees from which the redundancies will be selected (which generally includes groups of employees doing similar work);
  • Selection based on the application of objective, non-discriminatory selection criteria, such as performance and skills/qualifications; and
  • Consultation with employees over a reasonable period of time, discussing ways of avoiding redundancy and considering alternative employment opportunities.

Statutory Redundancy Payment

Redundant employees with a least two years’ continuous employment are entitled to a statutory redundancy payment which is calculated using a set formula based on the employee’s age, length of service and weekly pay.  Employees are entitled to:

  • One and a half weeks’ pay for each complete year of service after age 41;
  • One week’s pay for each complete year of service between ages 22 and 40;
  • Half a week’s pay for each complete year of service under the age of 22.

ACAS Guidance on Handling Redundancies

ACAS has produced a booklet aimed at providing guidance for employers on how best to handle redundancies.

More Information

If you need more advice on the topic of redundancy, please contact a member of our team.

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