Redundancy Explained - Lawful Procedures

London has the highest redundancy rate in the country and it is predicted to rise. Higher tax and commercial costs are forcing businesses to consider how they can save money.

Redundancy is rarely undertaken lightly, it is a procedure undertaken by businesses when there is the need to reduce the workforce, often to reduce costs. Redundancy is a forceful form of dismissal and should only happen when all other options have been considered. An employer must adhere to the fair procedures and rules when making a member of staff redundant. Failure to do so risks a claim for unfair dismissal.

The circumstances in which redundancy can be invoked are carefully defined under the Employment Rights Act 1996 the following are reasons for redundancy

Business closure - the employer ceases or intends to cease operating the business.

Workplace closure - the employer ceases or intends to cease working in the place where the employee works.

Reduced need for employees - the business still operates, but there is a need to reduce the number of employees to do work of a particular kind.

Once the need for redundancy has been identified, if the business is not closing down, it is essential that the selection of the employees that are to be made redundant is made strictly in accordance with the terms of the Employment Rights Act 1996 as if the selection is made due to any illegal prejudicial undertones there is a strong chance that the affected employee will revert to the Employment Tribunal and there is the potential for substantial damages being awarded due to the improper selection.

Mirko Prisco, an Associate commented, "Redundancy should not be regarded as an opportunity to exit an employee who, for whatever reason, does not enjoy a good relationship with some other employees. Nor should a person who is involved in a trade union or who has elected to take part in industrial action be selected due to their involvement. Below is a list of inappropriate reasons for redundancy selection. "Mirko further commented "attempting to make a person redundant for unfair or discriminatory reasons can prove an extremely expensive action, particularly if the employee in question takes the matter to the Employment Tribunal and is awarded compensation. The average award in 2022/23 was over £13,749 but, the maximum award for that time period was £179,124.00."

When making the selection for redundancy there are justifiable reasons that are connected to the business needs, such as those as follows:

• The closure of the business or the branch in which an employee works.
• The introduction of technology has reduced the requirement for certain roles.
• A reduction of demand resulting in there no longer being a requirement for the same number of employees.
• Certain work is to be outsourced.

Automatically Unfair Unlawful Reasons, individuals selected for the following reasons:

• Membership of a trade union
• Being an employee representative
• Taking part in lawful industrial action
• Made a request for flexible working
• Pregnancy or taking maternity/paternity leave or leave associated with adoption
• An individual who flagged up health and safety issues or acted as a health and safety representative
• Acted as an employee representative in a consultation
• Whistleblowing
• Asserted a statutory right that was not currently being extended

Discriminatory seasons: selection based on the following:

• Sexual orientation including gender reassignment
• Age
• Disability
• Race
• Religion or belief
• Religion or belief that requires a tangible manifestation, such as wearing certain clothing
• Marriage or civil partnership

Employers must consult individually with all employees who are to be made redundant, the potential for redundancy must not be just an announcement. The consultation must include the reasons for redundancy, how the employees are to be selected and also any possible ways of avoiding redundancy. As well as discussing with the employee any potential ways of avoiding redundancy. The timing and the process must be outlined. If there are 20 or more employees under threat of redundancy, there can be a collective consultation. The involvement and consultation with trade unions and the inclusion of elected employee representatives must take place. There are set timeframes within which the consultation must take place.

Giambrone and Partners lawyers strongly emphasise that the consultations take place with the guidance of employment lawyers to avoid the significant risk of inadvertently failing to comply with all aspects of the redundancy procedure and therefore being exposed to an employee seeking redress in the Employment Tribunal. Should the dismissal be considered to be procedurally unfair, even with a genuine valid redundancy, the legal risk of an unfair dismissal claim can and frequently does result in significant compensation.

Mirko Prisco is an associate based in the Manchester office, specialising in family and immigration law. He is currently furthering his expertise in corporate law, as well as intellectual property, employment law, and debt collection in the UK.

Mirko is recognised for his attention to detail, efficiency, and ability to manage a wide range of legal matters with professionalism and care. He is particularly experienced in handling complex applications and is known for delivering thorough and timely results across diverse areas of legal practice. He enjoys a high level of success with legal cases.

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.