Making staff redundant involves a complex procedure. While getting it right can be daunting, getting it wrong can carry a significant financial risk. We answer your queries on this area.
Question: We have an employee who is not very good at his job. We have tried to help with additional training and support but he is just not improving his performance. Can we make him redundant?
Answer: Redundancy is one of the potentially fair reasons for terminating the employment of an employee. However, in order for an employer to be able to rely on this reason, a genuine redundancy situation needs to exist.
An employee will only be redundant where their place of business closes or re-locates or where the employer no longer needs as many (or any) employees to do work of a particular type - for example, where a large customer account is lost.
In this scenario there is no genuine redundancy situation, and therefore to make the individual redundant is likely to amount to an unfair dismissal. We would advise either continuing with the performance management process with a view to dismissing on the grounds of capability (another of the potentially fair reasons) or else entering into without prejudice discussions with the employee to agree terms on which his employment will come to an end. How successful such discussions are is likely to depend on the attitude of the employee to the process you have followed to date.
Question: How many people you can make redundant in one go?
Answer: It is up to the employer to make a business decision about how many roles need to be cut. For example, if each employee costs the business £15,000 a year and the business needs to make cost savings of £90,000 then the employer might decide that it needs to lose 6 roles in order to achieve the desired cost saving.
However, you should be aware that if you are making 20 or more employees redundant at one establishment in any 90 day period you will have to consult collectively with employee representatives of the affected employees before giving the employees notice of termination. If you do not have existing employee representatives the employees will need to elect some and the timetable for the dismissals will have to be adjusted accordingly.
Question: Where we are making less than 20 employees redundant, do we need to follow any process?
Answer: Yes! Even though the collective consultation obligations are not triggered in such circumstances it is still very important that a fair procedure is followed prior to giving the employees notice of termination in order to avoid unfair dismissals.
The key to a fair procedure will be giving the employees adequate warning and consulting with them meaningfully before the proposed dismissals. This is likely to involve several consultation meetings before any decision to dismiss is made and confirmed.
Consultation should include consideration of how the redundancies might be avoided or their effects mitigated. You should consider carefully and reply to any representations made by the employees during the consultation process. The consultation must be genuine and not a sham even if it seems unlikely that another outcome can be reached (i.e. you must not enter into the process with a closed mind to possible alternatives to redundancy such as reduced working time).
It is good practice to ask for volunteers before making compulsory redundancies. However, make sure that you can refuse volunteers who are crucial to the business who you do not want to lose.
Any method for selecting the employees to be dismissed must be fair and free from any taint of discrimination - watch out for any selection method which could indirectly discriminate on the basis of disability or age. Employees should be able to understand why they have been selected and be able to challenge their selection during consultation if necessary.
You also need to keep an open mind about finding suitable alternative employment for employees who are being made redundant. This extends to vacancies with associated employers i.e. other companies in the same group. You should let employees know about all vacancies - even if these are more junior than the position which they are leaving.
If employees who are on sick leave or maternity leave are to be made redundant don't forget about them - they need to go through the same fair process as other employees as far as possible. This will include being consulted with and women on maternity leave MUST be offered any suitable alternative positions before other employees.
Finally, employees should be given a right of appeal against any decision to dismiss them as redundant.
Procedure is the key to carrying out redundancies fairly and mitigating the risk of employment tribunal claims being brought. A fair procedure involves time to allow proper consultation with employees. However futile the employer may believe this to be, they should go through the process with an open mind, constantly alive to possible alternatives to the redundancies proposed and should always avoid pre-judging the situation. The legal requirements can be daunting and employers are advised to plan carefully and take legal advice before launching any redundancy exercise.