Employment Law - Redundancy
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What is Redundancy?
In this current economic climate many companies are being forced to make some tough decisions with regard to making redundancies.
It is entirely understandable that employees will naturally feel aggrieved if they find themselves in the unfortunate situation of being made redundant. However, redundancy is one of 6 potentially fair reasons for dismissal, provided that there is a genuine redundancy and the employer has followed a fair procedure. If an employer has not made a genuine redundancy or has not followed a fair procedure, an employee will potentially have a claim for unfair dismissal.
What is a Genuine Redundancy?
There are three circumstances in which a genuine redundancy situation arises:
- There has been a closure of an entire business
- There has been a closure of an employee’s workplace
- There has been, or it is anticipated that there will be, a ‘diminishing need for employees to do work of a particular kind’
When there has been a closure of an entire business or an employee’s place of work it is fairly easy to determine whether there has been a genuine redundancy. Most questions of whether there has been a redundancy or not arise when there is a ‘diminishing need for employees to do work of a particular kind’. This covers circumstances where:
- There is less work and consequently the need for fewer employees to carry it out
- There is not less work but the employer needs fewer employees to do it. This usually occurs when, say, outside contractors are brought in or when new technological advances or a reorganisation within the company results in a more efficient use of labour.
Fair Redundancy Procedure?
If the redundancy is genuine, an employer must ensure that the redundancy procedure is fair. They should therefore undertake a period of redundancy consultation where, by way of a general guide, they should do the following:
- Adopt and apply an objective and fair selection process. For example, the selection ‘pool’ of employees who are at risk of redundancy should be fairly defined. Furthermore a fair selection criteria should be adopted, such as performance, skills etc, and such a criteria should not be discriminatory
- Warn and consult relevant employees
- Consult with any recognised trade union representatives or in some cases elected employee representatives (see below)
- Consider alternatives to dismissal
If your employer has not undertaken a fair consultation process, and you have worked continuously for your employer for at least 1 year, then you may have a claim for unfair dismissal. Time limits are strict in claiming unfair dismissal and you must do so within 3 months of the date of termination.
As of 6th April 2012, the qualifying period for bringing an unfair dismissal claim is 2 years continuous service. However, this only applies to employees who were employed after 6 April 2012. Consequently, if you were employed before 6 April 2012, you only need one year’s continuous service in order to bring a claim for unfair dismissal.
What is a Collective Consultation Process?
If your employer is making 20 or more redundancies in a 90 day period, they will need to undertake a redundancy procedure known as ‘Collective Consultation’. In this instance, as a general guide, the employer must consult with an employee’s representatives or a recognised trade union on the following:
- Avoiding the dismissals
- Reducing the numbers of employees to be dismissed; and
- Mitigating the consequences of the dismissals
- Mitigating the consequences of the dismissals
An employer must disclose in writing to the appropriate representatives the following information
- The reasons for the proposals
- The numbers and descriptions of employees whom it is proposed to dismiss as redundant
- The total numbers of employees of each description
- The proposed method of redundancy selection
- The proposed method of redundancy selection; and
- The proposed method of calculating the amount of any redundancy payments (other than statutory redundancy payments)
If the employer fails to comply with this ‘collective consultation’ process, the Tribunal may make a 'protective award' in favour of an employee or a group of affected employees.
What is Redundancy Pay?
If you have been made redundant you may be entitled to statutory redundancy pay. To qualify for the minimum statutory redundancy payment you will need to have been an employee who has worked continuously for your employer for at least two years and are being ‘dismissed’ on the grounds of ‘redundancy’
The amount of statutory Redundancy pay you are entitled to is determined by:
- Your weekly pay
- How long you have worked for your employer
- Your age
The time limit for bringing a claim for statutory redundancy pay against your employer is 6 months from the date of termination
Additionally, you should be aware that you may be entitled to an enhanced redundancy payment under your employment contract. As such, you should check your employment contract for details about your contractual redundancy pay.
How MTA Solicitors Can Help You!
We realise how distressing facing Redundancy can be, but it is important you understand your entitlements and the obligations of your Employer. Redundancy procedures must be carried out in accordance with Employment Law and our experienced Solicitors are on hand to provide you with the latest advice and guidance on your Redundancy rights. If your Employer has failed to follow any of the legally required Redundancy procedures, we will be able to advise you on making a claim for compensation.
We take a caring and sensitive approach with our clients, and will guide you through every aspect of your Redundancy Claim, making sure you are regularly updated on the progress of your case, communicating with you every step of the way.
We are a fully regulated firm of solicitors, governed by the Solicitors Regulation Authority and a member of The Law Society so you can be assured of the utmost service and attention.
Useful Redundancy Information Sites