How does the redundancy process work?

by Daniel Jones

As an employer, the last thing you want to do is make members of your workforce redundant, but sometimes there is nothing that can be done to prevent it.

In such cases, it's important that you carry out the redundancy process in a fair and proper way, because there is vast employment legislation under which you can be punished if you're shown to have broken the rules or chosen candidates for the wrong reasons.

Here we outline what you need to think about before making staff redundant so you can ensure that you comply with employment law.

1. Outline your redundancy process beforehand

Complying with employment law can be a minefield, so the most important thing you can do is be prepared. Get your redundancy policy in writing, so that if you have to make redundancies the company's redundancy process is already outlined. Lawpack publishes a Redundancy Procedure template to help you do this.

You can then be assured that you're complying with legislation and your staff will not have the uncertainty of not knowing the redundancy process.

2. Decide who you want to make redundant

If you decide to go ahead with making some of your staff redundant, make sure that you base your selection criteria on factors such as the level of experience and performance your employees offer. It cannot be the result of their age, gender, disability or pregnancy, as making anyone redundant based on any of these issues would be classed as unfair dismissal.

Several common methods for fair redundancy exist, with last in, first out being among the most popular. This involves making those with the shortest length of service redundant first.

However, you must be careful that this in itself doesn't show signs of discrimination, such as by only removing young people from their posts.

3. Ask for volunteers

There may be members of the workforce who would be happy to take redundancy, although this can be a risky move for a company as you might find some of your most experienced and talented staff apply.

4. Decide on your selection criteria

You can base your decision on disciplinary records, staff appraisals and qualifications. All of these would be deemed as fair barometers of a person's suitability for redundancy.

If the job you're currently paying someone to fill is to be removed and not filled again in the future, you can legitimately make the incumbent redundant without having to follow the selection process.

Be wary that staff have the right to appeal against your decision, so making sure you have watertight grounds for making people redundant is a must. If you don't, you might just find that your decision isn't final and that you are have to justify it in court.

5. Pay out

Once you have selected workers for redundancy and delivered the news to them, you will have to offer a redundancy package. It's common for redundancy pay to be provided, and there is an easy way to work out how much you have to spend.

For any young employee, you must pay half a week's wages for each year under 22 they are, while those between 22 and 41 will deserve a week's pay for every year older than 22 they are, and those 41 and older must be awarded 1.5 week's pay for each year they stand above the threshold.

6. Give your staff notice

You will need to offer a period of notice before you end someone's employment, with this ranging from one week to 12 weeks depending on how long they have been in their current role. For more detailed information, Lawpack's Employment Law Made Easy can help.

At all times, sticking to employment contracts and redundancy regulations is a must, as veering from these can land you in trouble.ADNFCR-1645-ID-801698114-ADNFCR

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Published on: February 26, 2014

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