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Redundancy Explained

In a nutshell, redundancy is where an employer has a reduction in need for employees - either because the whole company is closing, because a part of it such as a department or site is closing, or because there is reduced need for staff to carry out a particular role. Usually, but not always, redundancies are for economic reasons.

Employers need to follow certain procedures to ensure that redundancies are carried out fairly. If there is any alternative motive by an employer for making a member of staff redundant - or the redundancy process is not executed fairly and properly, then this could result in claims against the employer for:

Prior to undertaking the redundancy process, employers should carefully consider the overall situation, being mindful of the following:

It is imperative that the employer ensures that communication strategies are in place and ensure that everyone has the correct information. Ideally, compulsory redundancy should always be viewed as a last resort. Redundancies are always bad news and traumatic for the company and its employees. Redundancies are likely to have an adverse impact on company culture, morale, employee trust and productivity, and it can take years to recover. Careful and considerate handling of both redundant employees and those who remain can help.

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What are the Alternatives?
A redundancy process is but one possible solution to a business problem, it is very seldom a complete answer. The organisation needs to ensure that its whole business strategy is reviewed and that all reasons for lost competitiveness are addressed. There are strategies, falling short of redundancies, which although having an adverse impact, may be better than the alternative.

These strategies include:

What are the Employer's Responsibilities?


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Department of Business, Innovation and Skills (BIS)
The employer must notify BIS, using form HR1, at least 30 days before dismissal if 20 - 99 employees are at risk of redundancy. Notification should be provided to BIS at least 45 days beforehand if over 100 are to be at risk. One of the reasons for this is so that the DTI can compile accurate employment statistics and records and ensure adequate support for the unemployed.

Selection Procedure

Consulting Each Employee
The employer must consult each affected employee individually before dismissal notices are given, so that there is a chance of real consultation and time for the employee to respond.

The consultation should involve the following:

Other Work
The employer can offer the employee alternative work instead of making them redundant. The employee has a choice whether to accept it or not, though if the employee unreasonably refuses an offer of suitable alternative employment, the employer may avoid paying them redundancy pay. To meet the definition of 'suitable', the job must have similar pay, conditions and skill requirements. Whether refusal is reasonable is looked at from each individual employee's view. Some employees may accept the offer, others for their own personal reasons may not. For example, the new job may require more travelling for some employees than their current job, but less for others.

The alternative job offer must be made before the current job ends and the start date must be no more than 4 weeks after the old job ended. The first 4 weeks of the new job will be a trial period. During this the employee can still leave the job and claim their redundancy payment. The employer and employee can agree a longer trial period for the new job if they want, the 4 weeks is the minimum period.

Qualifying for Redundancy
Generally, in order to qualify for redundancy payments, the employee must be working under a contract of employment and have at least two years' continuous service with that employer. To calculate redundancy payments in accordance with legislation, please use the link below.

Redundancy Payment Calculator

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Being Made Redundant
If you are dismissed because of redundancy, this usually means that your employer has needed to reduce their workforce. This may either be because the place where you work is closing down, or because there is no longer the need (or no longer expected to be the need) for you to carry out the particular kind of work that you do. It is not a plausible redundancy if your employer immediately takes on a direct replacement for you. It does not matter, however, if your employer is recruiting more workers for work of a different kind, or in another location (unless you were required by contract to move to the new location). The definition of redundancy therefore covers 3 basic situations:-

Unfair Redundancy
You may be able to claim unfair dismissal:

These are only a few examples. You generally need to have 103 weeks' service in order to claim unfair dismissal. For further information, please go to the Disciplinary page in this section of the site which outlines Grievances and Appeals.

Redundancy - Management Aftercare
Once the redundancy period is completed, there will be a need to rebuild the team - to manage the 'Survivors'. An initial feeling of relief at having escaped the axe soon goes. Often in the aftermath, staff have feelings of guilt, anger, and uncertainty. There is a lack of morale and more likely, a need for motivation and direction in the day to day work. There is a need to address the reservations, fears and negative views of staff and management, to ensure awareness of the feeling and issues, therefore creating a climate for prompting solutions to areas of difficulty.

Often the remaining roles and responsibilities will require significant changes and the development of more effective procedures. The tools (training, processes, procedures, leadership) need to be provided for staff to be more effective workers, communicators and/or managers as appropriate. Providing private and group sessions can give staff the opportunity to discuss their concerns about day to day operations, their future and company plans.

Help and Advice
Redundancy processes, are difficult and emotionally traumatic and because of this it can be prudent to involve specialist Employment Law Consultants to be a part of the process. If you don't have the benefit of an HR department, there can be huge risks by taking this road alone. Pure Employment Law are offering users of the Transport's Friend website free initial advice. You can contact us on 01243 836840 or visit our website

Further Reading
For further information on the subject of Redundancy, please visit the links to the following websites

Redundancy - ACAS
Redundancy Help

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