It may not be an issue that an employer wishes to face, but in
today's economic climate, redundancy is becoming an increasing
reality for some. Embarking on a redundancy procedure can seem like
a daunting task, but it does not have to be if you give proper
consideration to implementing a fair and reasonable process.
Most large businesses have a formal procedure in place for
handling redundancy situations, but not all employers know where to
start and can so easily fall foul of what is deemed to be
objectively reasonable, giving them an even bigger issue to deal
with in the long run.
In Guernsey there is no statutory process which employers must
adhere. Following Commerce & Employment's Code of Practice
and adopting a step-by-step process can help reduce the risks of
getting it wrong.
So, where to begin?
Start by taking stock and ask yourself: ''Is this truly
a redundancy situation?"
To dismiss an employee on the grounds of redundancy is a fair
reason providing the redundancy is genuine. Have the requirements
of your business changed?
Next - consider whether the situation can be avoided. Is there
any suitable alternative, such as redeployment? If not, identify
those employees who fall within the 'pool' of people facing
redundancy and then, through an objective selection process,
identify those from the 'pool' that will face
Once identified, an employer should embark on a fair and open
consultation process to ensure that both parties fully understand
the position and all reasonable alternative solutions have been
explored before making the final decision. Only then, after all of
these steps have been taken, can an employer truly say they have
conducted a fair and reasonable redundancy procedure.
Do remember that there are no statutory provisions in Guernsey
that require an employer to make a redundancy payment to an
employee. In Jersey, however, statutory redundancy pay has recently
In Guernsey, unless there is a contractual requirement
stipulated in an employee's contract of employment, the
employer is not obliged to pay the employee anything. It is,
however, common for employers to make voluntary (or 'ex
gratia') redundancy payments.
What if it goes wrong?
Although making an employee redundant is a potentially fair
reason for dismissing a person, get the procedure wrong and an
employer can find themselves facing a complaint to the Employment
Tribunal and, if unsuccessful, making an even bigger payment than
they had ever envisaged: up to 6 months' gross earnings!
It is, of course, possible to defend complaints but to do so is
time-consuming, very expensive and can often generate negative
This is one of the main reasons for having an employee enter
into a compromise agreement once the redundancy has been finalised
- an employer may be required to offer a financial pay-out to
'sweeten the deal' but by doing so, the employee waives
his/her rights to pursue an employment-related grievance. This
saves the employer from risk of a future claim, particularly if
he/she suspects the procedure may not have been handled as fair
and/or as reasonably as perhaps it could have been.
Even if an employer feels they have done everything 'by the
book', it may be sensible to try to enter into a compromise
agreement, as employees often bring claims without any real merit,
and because legal costs are irrecoverable before the Tribunal, it
will cost the employer a significant sum to defend the claim, win
A final word of warning - if your business is considering making
redundancies, please seek professional advice as soon as possible.
It is so easy to mis-handle the situation and put your business at
risk of a possible claim and exposure to an award of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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