Employees and redundancy

Redundancy occurs where you are dismissed from your employment and the reason for that dismissal is not directly related to your ability or conduct but to factors affecting the business and its need for the services of employees generally or you in particular. Those who have been made redundant have certain rights - both in how they are treated leading up to dismissal and as to the payment of money to them as a result of that dismissal.

What is Redundancy?

Redundancy is a form of dismissal from your work where the reason relates not directly to you (although this may have some bearing upon who is selected for redundancy) but to your employer’s business and its current need for people who do your job, or have your skills or who work at the place where you work.  It is usually associated with a reduction in the
workforce by your employer.

Although employers sometimes try to claim that a dismissal is a redundancy – often because they want to dispense with the services of the person being made redundant – it will only be a genuine redundancy if:-

• the business as a whole needs to close down,
• part of the business needs to close down or move to a different location, or
• the business needs to reduce the number of employees which it has - either generally or doing a specific task – because the need for employees who perform particular functions has reduced or ended

It doesn’t necessarily mean that the business no longer needs anyone who does the job that you do – merely that they don’t need so many people or that they need people who do something else as well.  That is one of the areas where personal capability might be a factor in that when selecting for redundancy, the employer might decide to keep the hardest working or the more skilled of the people doing your job and make redundant the ones who bring less to the business.  Therefore, just because someone else starts to do your job does not mean that it was not a valid redundancy. However, if your employer makes you redundant and then immediately hires someone else to do your job, that would not be a genuine redundancy since your job, or the need for someone to do your job, would not have disappeared.

What situations give rise to redundancy?

There are a huge number of different situations that could arise which meant that a person was genuinely redundant and all of them have to be looked at on the basis of their own particular facts as to whether it is a genuine redundancy. However, some examples include:

• the business is making a loss and needs to cut the number of staff generally or in particular areas,
• the need for one or more of the products or services of the business has reduced,
• increased competition for the product or service means that market share has fallen,
• the business has been taken over, or has merged, and there is a duplication of functions,
• processes or technology has changed and the business no longer needs people who perform a particular function,
• the employer needs to close down a particular branch or factory and there are either no openings in other branches or factories,
• the employer wants to move production or service to another location and the employee cannot relocate,
• the business, or the location from which that part of the business is carried on, has been destroyed, for example by fire,
• the business has become insolvent, or
• the business is run by a sole proprietor who has died.

If you are unsure about whether the reason for your dismissal was genuine, then please contact employmentlawhelp on 084 4804 4800 and we will be pleased to advise you.

Factors which could show that the redundancy was not genuine include:

• If the employer has taken on other people - either to do your job or to do other jobs which you could have done had they not been employed,
• If you are the only person being made redundant, either generally or in your department,
• If others in your department have not been notified that they are at risk of redundancy,
• If there is no evidence of the reason that you are given for redundancy - e.g. you are told there has been a reduction in orders but the business is busier than ever,
• if there were factors which could indicate discrimination - for example because you are from an ethnic minority, a woman, pregnant or you have a disability,
• earlier disputes with your employer, or
• you have recently raised a grievance or assisted someone else in raising a grievance.

In certain circumstances, even if there was a genuine redundancy situation at the work place, the redundancy can still be unfair if the reason you were selected for redundancy was, for example, because:

• you had asserted your statutory rights,
• you were on maternity leave,
• you are a part-time or fixed-term worker,
• you have requested flexible working arrangements,
• you have participated in, or refused to be involved in, trade union activities,
• you have acted as an employee representative, or
• refused to do work in a shop or betting office on a Sunday.

The list is not exhaustive and employmentlawhelp can provide you with further guidance and advice on these issues should you require.

What procedure should my employer follow if I am redundant?

If the reason for redundancy is genuine then your employer must follow a set procedure before making you redundant. This is the Statutory Dismissal and Disciplinary procedure which applies to all dismissals. If your employer fails to do so then the redundancy can be rendered automatically unfair and you could be eligible to an increased amount of compensation should you decide to bring proceedings against the employer in the Employment Tribunal.

You should also note that there is a different procedure if your employer is making more than 20 people redundant within the same 90 day period - we will look at this briefly below.

Before your employer can make you redundant there are three steps which need to be followed:

• first you should be given a written statement setting out why you are at risk of redundancy
• secondly there needs to be a meeting when the matter can be discussed with the employer, and finally
• having received the employers decision as to the redundancy following that meeting, you should be given the opportunity to appeal against the decision at the first meeting.

The benfit of having a meeting with the employer is that it gives you the opportunity not only to find out why you are being made redundant and to judge whether this is genuine, but also it gives you the opportunity to suggest alternatives to redundancy such as working elsewhere in the business, retraining or effecting a job share with another employee. We will look at these in a little more detail below.

If there is ano alternative to redundancy, however, then the employer must give you a minimum period of notice before making you redundant. This will depend upon your contract or how long you have worked for the employer and ranges from one week if you have been employed for up to two years through to 12 weeks if you have been employed for 12 weeks or more.

Selection for redundancy

Even if the procedures above are satisfied, your employer must still be able to show that the reason why they have selected you for redundancy, as opposed to one of your colleagues, is fair and objective. We have already outlined above some of the reasons which will automatically make the redundancy unfair. In addition, however, the employer should use objective criteria in reaching a decision and the same criteria should be applied to everyone. Factors which they may take account of include:

• relevant skills
• capability
• experience
• disciplinary records
• other competencies
• involvement in the business

If you think you have been chosen unfairly for redundancy then contact employmentlawhelp for further guidance.

Redundancies involving 20 or more people

If your employer is planning to make 20 or more people redundant at any one location over a period of 90 days or less then they are under a duty to consult with trade union representatives or staff representatives before the redundancy notices are sent out. This consultation should consider issues such as ways of avoiding or lessening the effects of the redundancies, alternative working arrangements and when the redundancies should take effect.

This consultation should begin well ahead of the proposed redundancies but in any event should be at least:

• 30 days before the first dismissal takes effect if there are between 20 and 99 employees affected, and
• 90 days before the first dismissal takes effect if 100 or more employees are affected.

Failure to consult could lead to financial consequences for the employer.

Having consulted, the employer must then select from within the pool of people eligible for redundancy. This selection must be fair and objective and as stated above, must not be for unfair or discriminatory reasons. If you have any doubts as to whether a collective redundancy has been carried out correctly then please contact employment law help.

Redundancy pay

If you have been made redundant then one of the most important factors for you is likely to be how much redundancy pay you are likely to receive.

As a minimum you should receive the statutory redundancy pay from your employer. However, depending upon the terms of your contract, you may be entitled to an enhanced payment. Employmentlawhelp can assist you in calculating this.

To be entitled to redundancy pay you must have been an employee (as opposed to self-employed), have worked for the employer for a minimum period of two years and not be in one of the “excluded occupations”.

You should note, however, a number of key points:

• the fact that your employer does not describe you as an employee does not automatically mean that you are not one. Often employers will try and define staff as something else - e.g. casual labour, self-employed or a contractor so as to avoid liability for tax, NIC or responsibility for the employee’s working conditions. Employmentlawhelp can advise you with regard to this should you be uncertain of your employed status
• there is no lower age restriction on who can claim a redundancy payment - the two years can run from age 16
• if you are genuinely being dismissed for misconduct, then redundancy payments will not apply

Those who are not entitled to a statutory redundancy payment include:

• merchant seamen, share fishermen and some dock workers,
• civil servants,
• members of the police,
• members of the armed forces,
• apprentices,
• a domestic servant who is part of the employers immediate family,
• fixed term contract workers of more than two years who have renounced their rights, and
• redundant employees who refuse the offer of suitable, alternative work.

So far as the last of these is concerned, you may still be able to claim unfair dismissal depending upon whether it was reasonable to to reject the alternative employment. In any event, the alternative employment will have to be suitable based on hours, location, pay, status and whether you possess the appropriate skills and abilities.

The amount of pay which you will receive depends upon three factors:

• how long you have worked for your employer,
• how old you are, and
• your weekly pay.

Currently, statutory redundancy pay is calculated on the basis of:

• 1.5 weeks’ pay for each full year of service where the employee was aged 41 and over
• 1 weeks’ pay for each full year of service where the employee was aged 22 and above but less than 41
• 0.5 weeks’ pay for each full year of service where the employee was aged less than 22.

The maximum number of year’s employment which can count is twenty.

There are specific ways in which weekly pay is calculated. It will normally be your normal gross pay at the time you were made redundant up to a maximum limit. If you earn more than the maximum, then a weeks pay will be the maximum figure - if you earn less it will be what you earn. Normally overtime payments will not be taken into account unless overtime was compulsory and happened regularly, however, if you regularly receive commission this will be counted. If your pay varies from week to week you will be paid the average for the 12 weeks leading up to your redundancy.

Request a call back from our expert team of Employment Solicitors or give us a ring on 084 4804 4800