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Redundancies

Redundancies

Redundancies are something that we hope you never have to go through but ultimately for most businesses sometimes they are completely unavoidable.

One of the most notable things to remember about redundancies is that the employee usually receives a payment.  For this reason, it can often result in misinterpretations.  It is often mistaken that a redundancy is different to a dismissal – it isn’t; a redundancy is a form of dismissal.  It is also often mistaken that because the employee receives a payment then the dismissal is a fair dismissal.

Neither is true.

Both of these myths can result in misconceptions that are dangerous for employers.  Firstly, it is worth remembering that Employment Tribunals can and do look behind the label we give a dismissal.  Therefore, it is of critical importance to know that redundancies need to be genuine – paying a sum and calling a dismissal a redundancy will not be enough to satisfy an Employment Tribunal that a dismissal is fair.

What is a redundancy?

To put it simply, a redundancy covers: 

  1. An actual or anticipated ending or falling of work of a particular kind
  2. An actual or anticipated ending or falling of work in a particular location

Restructures

You may have heard that a company can restructure a department which can result in redundancies.  In that instance, a company may take a middle manager and split their role up so that some parts are done by more senior managers and some by less senior managers or operatives.  Whilst it may not appear to fit in the above scenarios, it actually does.  In that instance, the employer is saying that they are ending the particular kind of work that the manager does and redistributing it amongst others so there is no need for a role covering that.

So what is not a redundancy?

Due to the misconceptions around redundancies, some employers have tried to use redundancies as a mechanism for a number of different reasons including:

  1. Dismissing an employee as redundant following a period of poor performance
  2. Retiring an employee
  3. Replacing an employee with someone else
  4. Tackling poor conduct
  5. Streamlining dismissals

Needless to say, none of these fit the definition of redundancy and a Tribunal could hold the dismissal to be unfair and award compensation.  It should also be noted that in the example above, point 2 could also be age discrimination resulting in a claim for unfair dismissal and discrimination.

How to make a redundancy fair

It is important to remember that fairness tends to have three strands:

  1. A fair reason
  2. A fair process
  3. A fair outcome

Redundancy is no different.

A Fair Reason

If a redundancy is a genuine reason and you can demonstrate it, a Tribunal is likely to find that the employer had a fair reason for dismissal.  You should carefully consider the business needs and be ready to demonstrate it.  

Very often the workers know redundancies may happen before the management do – they are the people on the ground and can see things like falls in work numbers long before the managers have received the data.  Sometimes redundancy is a shock to many and therefore an employer should be prepared to justify the redundancy.

A Fair Process

A fair process will include a period of consultation with the employees at risk of redundancy.  Consultations should not be rushed and should be a genuine mechanism for both the employee and employer to work together to avoid and/or reduce redundancy dismissals.

Remember that when over 20 people may be made redundant in a period of 90 days or less, there are special rules to follow about consultation processes called ‘Collective Consultation.’  Breaching these special rules can lead to Protective Awards – a compensation payment of up to 13 weeks’ pay per employee.

A Fair Outcome

If you can demonstrate that there are no reasonable alternatives to redundancy that would satisfy the concerns of the business then you can demonstrate that you have a fair outcome.  A Tribunal will not substitute your decision for theirs.  For example, if the employee tabled a suggestion that the employer did not adopt, the role of the Tribunal is not to conclude that you should have adopted the suggestion – instead their role is to check whether the employer acted fairly in dismissing the suggestion.

Conclusions

Redundancies can be fraught with danger but with the right help, you can avoid costly Tribunal processes.

We would highly recommend having trusted advisers in your corner to help you.  Wilford Smith’s business-focused services specialise in Employment Law, Commercial Law, Company Law, Commercial Conveyancing, Regulatory and Criminal Investigations. 

We can be your trusted adviser in all areas.

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