I’m an employer

Redundancy

Redundancy is where an employer has a reduced need for employees to carry out work of a particular kind. Perhaps new technology or reduced workload means that a job is no longer needed.

If an employer wishes to make employees redundant, there is a formal procedure to be followed. Otherwise a dismissal is unfair. In summary, there must be a genuine redundancy; the procedure for selecting the jobs to go must be fair and objective; selected staff must be properly consulted; and alternative employment must be considered. There is no redundancy if an employer can offer suitable alternative employment.

In practice, employers usually start the process knowing the employees they least want to keep. But unless they devise and apply ‘fair and objective’ procedures to select their jobs, the dismissals will be unfair.

The dismissal procedure is more complex where an employer proposes to dismiss at least 20 employees at one establishment within a period of 90 days. Here there is a duty to consult employee representatives. Whether or not consultation is a legal duty, effective communication with staff, not just with leavers, is key to staff motivation.

Redundant employees with at least two years’ service are entitled to a statutory redundancy payment, tax free, which varies with salary, age and length of service. This is in addition to notice (or pay in lieu of notice) and accrued holiday pay.

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