Redundancy

There may be various reasons for considering redundancies, including:

• The need to reduce costs
• The effect of changing working methods
• The re-organisation of work functions
• The introduction of new technology
• The loss of a contract or funding
• The business becomes insolvent
• The business is relocating

The planning stage in a redundancy exercise is crucial. Having precise, justifiable evidence strengthens the case and shows that it is a genuine redundancy situation. You should consider all the issues dealt with in this topic and give particular consideration to defining why redundancies are necessary. One way in which this can be done is by preparing a business case, which sets out the reasons behind why redundancy is being considered. 

The business case

The business case forms the backbone of the consultation process, as it outlines the reasons why redundancies are needed. It is the first thing a tribunal would ask to see if any claims were to be raised, so should be sufficiently detailed for any outside parties to understand what the business needs to do, why, and why you have no other options.

The business case, essentially, starts the paper trail and will be your reasonable justification for making any dismissals. It is just as important as taking minutes and sending invitation/outcome letters to employees. A redundancy without a business case would be like offering a new job without giving a contract – not recommended!

Whilst it may seem like a chore to put together, in the long run it can help protect the business against successful tribunal claims. 

What to include in a business case 

It is very important to establish the reasons why redundancies are being considered. The business case is likely to be based on either economical, technical or organisational reasons. The detail required will depend on which of these it is. If it is financial, for example, you should be able to show the organisation’s financial position, including profit and loss, forecasts, cost savings etc. If it is due to reduction in work of a particular kind, include how much it has reduced by and the reasons for it.

You should conduct an analysis to assess if the proposed redundancies will meet the organisation’s requirements for the foreseeable future, i.e. for at least six months. It is better in a redundancy situation to take firm decisions once, rather than to have a series of redundancies. These can undermine the morale of the remaining employees and affect the viability and/or profitability of the organisation in the longer term. The analysis should be carried out on the widest possible basis. It is often the case that while one area of the business reduces or closes, another may be expanding, even if this is only in the short term.

As part of this analysis, exhaust all potential options for avoiding redundancy action – redundancies should only be considered as a last resort if no alternatives are available. As such, include considered alternatives in the case, why they have been rejected or have proven inefficient to meet business needs.

The business case should also outline which roles are at risk and why. The business case should contain an employee chart which lists the names of the affected employees, their start dates and dates of birth. This helps make sure that you have included everyone you need to, and the information will later be used to calculate statutory redundancy payments where this applies.

All employees who do the same or similar role should be included in the business case and as part of the consultation process. This includes employees who may provide cover for the at-risk positions during periods of sickness or annual leave. An employee could raise concerns of unfair treatment and discrimination if they are placed at risk of redundancy but someone who does a similar role is not.

With the business case, it’s best to compile two organisation charts, one pre and one post redundancy; with the individual(s) start dates, dates of birth but including job titles rather than names of the post holders. This is used to understand what you are trying to do, identifies any redundancy costs and highlights possible areas of challenge before consultation with employees begins.

If you recognise a trade union, this should be mentioned, with information relating to any collective agreements or entitlements.

In summary, you should try to ensure that the below points are all covered in the business case:

1.     An overview of the business - what it does, trading levels and future forecasts.

2.     A description of why there is a reduction in work and specific details of the need for making redundancies – for example, figures to show company losses and any cost savings by making the redundancy.

3.     An outline of any alternatives which may be available or have been considered - i.e. other ways savings could be made in the business/recruitment opportunities and why these were not viable.

4.     Identification of what roles are at risk of redundancy and why; how many people currently do that role and how many you are reducing by - include details of all employees who do the same or similar role as the ones at risk of redundancy.

5.     An outline of the roles that will remain necessary in the company after the redundancy process and how these have been identified.

6.     Details of any other redundancies which have taken place in the last 6 months or any plans to make further redundancies in the next 6 months.

Do employees get to see the business case? 

It’s recommended that you provide an employee with a copy of a business case if they ask for it. However, as long as you discuss its content in detail throughout the consultation meetings, and allow sufficient time for employees to raise questions and concerns, you do not need to pro-actively give them a copy of the case.

Keep in mind that the business case is the first thing a tribunal and other external parties (e.g. a trade union) would ask to see, so it’s important it remains ready and available.

In the event an employee does ask for a copy, you are able to redact some financial or other information, in order to protect the organisation’s legitimate interests. But, it should remain detailed enough to clearly justify why redundancy action is necessary.

 Other considerations during the initial planning stage

• Preparing a timetable for the steps that will need to be taken, when they will be taken and by whom.
• Preparing in advance the draft documentation you will need at each of these stages and ensuring at all times that such documentation is securely stored and kept confidential.
• Checking in advance all affected employees' contracts of employment and other details, for example as regards length of service, notice periods, whether you have the right to make a payment in lieu of notice, the employee's age and their salary and benefits packages.
• Explaining to managers the legal timescales involved. For example a large scale (more than 100) exercise will involve a 45-day consultation period and a notice period of up to 12 weeks depending on the terms of the contracts of employment, plus time needed for elections of staff representatives. The process can take around 5 months in total and even a single redundancy involving just one post will take a few weeks to handle fairly.
• Lining up your team, for example payroll, lawyers, accountants, outplacement consultants, job centre and so on (you may have to wait until after the initial announcement is made for reasons of confidentiality).
• Whether you have got employee representatives in place to consult with in the case of collective consultation or you need to build in an election process.
• Managing the human element. Redundancies invoke many emotions and you must be prepared that even the most skilled can find it hard to make the announcement or sound genuinely concerned when what they have been told to say is scripted. They will go 'off script' and you will have to be prepared to clarify things. A 'frequently asked questions' document for managers may help to keep them 'on message'.
• The strategies to be put in place for those who are left who will need clear leadership and direction; and who at a senior level you will keep free for the appeal stage so there can be no allegation of prior involvement.

Different information should be provided at each stage of the redundancy process. 

Generally, the key piece of information which should be communicated throughout is the reasoning and justification for proposing redundancy action.

Similarly, to ensure consultation is genuine, it must be a two-way process. As such, it’s important you provide ample time to answer employees’ questions and listen to their concerns and suggestions. Tailored feedback should be given if a proposal is rejected, or an employee is not happy with a certain decision.

Consultation, essentially, means discussing the redundancy proposals with affected employees through a series of meetings. For the consultation to be meaningful, it should be two-way. This means employees should be given sufficient time and attention to raise questions and concerns and have reasonable responses given for them.

 Any suggestions they provide as ways to avoid redundancy action should be fully considered. Where they are not feasible, a detailed explanation should be provided.

Other key measures to remember are:

• Consultation must begin at a time when proposals are still at a formative stage. This means that, at no point, should employees be told that redundancy action is definite or that their role is no longer needed; this should only be done after the (minimum) three consultation meetings have taken place and all alternative options exhausted.
• Sufficient reasoning must be given from the outset for the proposed redundancies. You can do this by discussing your business case with those affected. 
• Employers must give adequate time for employees to respond.
• Before finalising the proposals, employers must conscientiously take into account the responses of the employees.

It can be useful for an employer to reduce compulsory redundancies by accepting volunteers. This can have the advantage of allowing those who want to leave to do so, it can be more palatable to staff and can shorten the inevitable period of instability. However, you should:

• Avoid committing to accepting them as you risk losing those with skills you want to retain.
• Define how you will choose between them if you have more people come forward than required. This may need to be considered carefully as merely selecting the cheapest redundancies to make could be discriminatory in its effect.
• Avoid having a policy of not re-hiring anyone who takes voluntary redundancy (as this can also be indirectly discriminatory).

There is no employment legislation which refers specifically to the process which must be followed in redundancy situations where fewer than 20 redundancy dismissals are proposed. However, the outcomes of past tribunals have shown that, to demonstrate meaningful consultation has taken place, employers should hold at least three meetings over the course of a 14-day period. Employers who failed to do so ended up paying out significant compensation for successful unfair dismissal claims at employment tribunals. As such, organisations should keep in mind the risks of not following past examples.

There are exceptional circumstances where an employer may be able to argue successfully that they have dismissed an employee by reason of redundancy where no consultation took place. However, these cases are rare and very carefully scrutinised, and the employer will be required to produce evidence that unequivocally demonstrates that there was either ‘no time to consult’ or ‘no point’ as the consultation in their particular circumstances would have been utterly futile. This is typically seen in situations where an organisation becomes insolvent, or unforeseen circumstances means they must cease trading immediately and indefinitely.

The process will differ depending on how many people are being made redundant and how long they have worked with you for.

Single post-holder

In a redundancy situation which involves a single post-holder, consideration of selection criteria will not be relevant. But, you should seriously consider whether the post is, in fact, a standalone function or whether the employee should be pooled with other employees doing different jobs which require a similar skill set.

For less than 20 redundancies, you should hold at least 3 consultation meetings over a 14-day period.

The first meeting can be informal and does not require advance warning or written notification. Instead, you could ask employees to attend a “business catch-up” if you wish.

Employees have the right to be accompanied by a colleague or trade union rep at subsequent formal consultation meetings.

Closure of business / team / department

Where there is the closure of a full business or team/department, the same process can be followed as is for single post, standalone roles, but only where the total number of redundancies is less than 20.

20+ employees

If you are proposing to make 20 or more people redundant at a single establishment within a 90-day period, you are legally required to conduct collective consultation. What is classed as a “single establishment” is not defined in legislation. It is generally understood to mean a geographical location, but this is not always the case; a workforce spread over several sites can also amount to one establishment. 

Collective consultation rules mean you must provide employees with the opportunity to elect representatives (or use existing trade union reps where applicable) and submit an HR1 form to the Secretary of State via the Insolvency Service’s Redundancy Payments Service (RPS). The consultation period should last for at least 30 days before giving notice of redundancy dismissal. This increases to at least 45 days if you are proposing to make 100+ redundancies. Further information on this process is available in our dedicated employment law resource Information and consultation on collective redundancies.

Small businesses

The redundancy consultation process is the same regardless of the size of the business. Small and large business alike must adhere to the above rules.

Fixed term / part time posts

Workers employed on fixed-term or part-time contacts, irrespective of length of service, have the right not to be subjected to any detrimental treatment.  In other words, they cannot unfairly be selected for redundancy just because they are not full-time or permanent employees.

Regardless of any collective consultation you might have been engaged in, you will need to consult with the individuals who are selected before any notice of dismissal is given. This is critical to avoid a finding of unfair dismissal.

For less than 20 redundancies, you should hold at least 3 consultation meetings over a 14-day period.

The first meeting can be informal and does not require advance warning or written notification. Instead, you could ask employees to attend a “business catch-up” if you wish.

Employees have the right to be accompanied by a colleague or trade union rep at subsequent formal consultation meetings.

The key piece of information which should be communicated throughout is the reasoning and justification for proposing redundancy action.

To ensure consultation is genuine, it must be a two-way process. As such, it’s important you provide ample time to answer employees’ questions and listen to their concerns and suggestions. Tailored feedback should be given if a proposal is rejected, or an employee is not happy with a certain decision.

There are two stages to individual consultation.

Is there a different process for small organisations? 

No, the redundancy consultation process is the same regardless of the size of the business. Small and large business alike must adhere to the above rules.

"At risk" meeting - First meeting

With a pool of staff, the first meeting can be a group or individual meeting. There is no need to give advance warning or written notification of the first  meeting. Instead, you can ask affected employees to attend a “business catch-up” meeting, or announce the proposals during any regular, scheduled team meetings, if these would normally take place.

Holding the meeting 

At this meeting you should explain the rationale for the redundancies and produce the current and proposed organisation charts (these should not include employee’s names, rather simply state the job role) so that employees can fully understand the nature and scope of the changes to the structure of the workforce. Other points to introduce at this meeting are to seek requests for early retirement, voluntary redundancy, alternative employment or redeployment to other departments; lay off or short time working. 

You can explain at the meeting that, if there is no interest in voluntary redundancy, you may have to look at making compulsory redundancies, but will do everything possible to avoid this. A letter and form employees can use to apply for voluntary redundancy is available here. 

Discuss proposed selection criteria 

The proposed selection criteria should be discussed and agreed in principle at this first meeting. It is a good defence against any claim of unfair selection or insufficient consultation to secure agreement from the employees over the correct criteria to use. 

Before closing the first meeting, you can request that all employees consider the points raised in the meeting and agree a date for the second meeting (usually several days later). Inform the employees that they are free to contact you at any time before the second meeting if they have any points they wish to clarify. Ensure the meeting is minuted and the start and end time is noted on the minutes. 

After the meeting  

Following the meeting, affected employees should be issued with an “at-risk” letter. The issuing of these letters at the outset can minimise any misunderstandings and they serve as clear evidence that you have started and mean to comply with a consultation process, thus minimising exposure to an unfair dismissal claim.   

*If collective consultation applies (20+ proposed redundancies), an election process should take place before progressing to the second consultation meeting. The next meeting would then be held with the elected employee (or trade union) representatives. See our dedicated resource for further information.

 Further consultation - second meeting 

Employees have a right to be accompanied by a fellow employee or trade union representative at this consultation meeting. Unless collective consultation applies, the meeting should be held on an individual basis with each person. Group meetings can be held at the request of the employees; but this is rare.

Holding the meeting 

Begin the second meeting by reviewing and agreeing the contents of the minutes of the first meeting with the affected employees. If there are any ambiguities, clarify them at this stage.  

You may need to explain again the reasons why the employees’ positions are at risk – employees’ reactions to redundancy vary greatly. If there is a noticeable downturn in trade, then it may be more likely to be accepted. Whereas, if you are carrying out a re-organisation then the employee may not agree with the rationale for change. Therefore, it is important not to rush any of the consultation meetings and to make sure you address all points in a logical and empathetic manner. 

Remember, if you cannot justify the reasons for redundancy in the consultation meetings then you are unlikely to successfully convince a tribunal either.  Additionally, a tribunal is entitled to investigate whether the redundancy situation is genuine.

 Employee questions 

When the employees understand the rationale for redundancy, invite and respond to any questions from them. If there are any questions which require a detailed response or are more complex in nature, you can inform the employee that a written or verbal reply will be forwarded as soon as possible.

Alternative suggestions  

You should utilise this meeting to address the viability of any suggestions which you suggested in the first meeting that employees might wish to consider. Frequent examples are reduction of hours, changes in working practices, reducing overtime and ceasing sub contracted work. Remember, the emphasis is on meaningful consultation – this means a constructive two-way dialogue where possible.

Explain to the employees that this is their opportunity to put forward any suggestions which they feel are relevant and may avoid the need to make job losses. All suggestions and responses should be detailed in the minutes of the meeting. The important point which tribunals consider is not whether the employer actually adopted any of the alternatives to dismissal offered by the employees, but rather that there is clear evidence that they were considered seriously.

 Discuss selection criteria 

If the selection criteria was not agreed in the first meeting, then you will need to ensure now that all employees understand and have agreed it. If there are any queries regarding the interpretation or application of the criteria, this is the appropriate forum to resolve them.  

Ensure that this is minuted, noting the start and end time, and that employees have access to the minutes.  When you meet individually with the lower-scoring employees they will be able to challenge their scores. If you have a clearly minuted agreement to the criteria themselves from this first meeting, it will make later discussions much easier and more focused. 

Clarify with the employees whether they have any questions and respond to them before formally closing the meeting.

Following the second meeting 

Consider the use of an individual meeting between the employees and managers responsible for scoring them; this can take the form of a minuted question and answer session to ensure all scores are accurately recorded. If you decide to do this, inform the employees in the second meeting of this and set a date for this meeting. Or, in some instances, the use of interviews or assessment centres are used as a means of selection. Advance warning of this should be given and agreement from employees obtained.

Employee challenges to scores 

During this meeting the employee may produce further information in relation to their qualifications which the employer may not have recorded and which would materially affect their scores. Or, in the cases of absence, the employee may state that these are attributable to a disability which has not been recorded on the personnel file.  It is extremely important to note all questions and responses.

Scoring employees

Ensure that the person doing the scoring has first-hand knowledge of the individuals in question. A meeting may take some time, therefore if you are dealing with multiple employees, it is important to plan them out, allowing sufficient time for breaks or overruns. Ensure that before the meeting is closed the employee reads and signs notes of the meetings and the score on the selection criteria sheet to confirm that they have read, agree and accept the contents of the meeting and scoring sheet. 

When the scoring meetings have been finalised, the managers responsible for the assessment should double check the scores before drafting a final master copy matrix depicting all the employees and their respective scores. From this final matrix the employer should clearly be able to identify those employees who are the lowest scorers and therefore most at risk of redundancy. Employees can then be invited to the third consultation meeting. With the invite letter, you should include a copy of their score sheet.

Keep in mind that, following the third meeting, there is scope for the overall scores to change; some may increase or decrease depending on employees’ feedback. As such, it’s important to remember that a redundancy dismissal is not certain or confirmed.

Further consultation - the third meeting 

This is an individual meeting, in which the employee has the right to be accompanied by a colleague or trade union representative. 

Holding the meeting 

You can review the process and information which has been shared so far, then go through the employee’s score sheet, to ensure that they understand the scoring process and address any queries they may have. It is important to demonstrate that the scoring process has been transparent, and at this stage you may receive a request from the employee to see the scores of the remaining employees in the pool, as their own score in isolation is meaningless. It is good practice to show these scores. You can, however, obscure the names of other employees, to make sure their information remains confidential.

In the majority of cases, the employee will accept the scoring process. Should an employee reasonably object to their score, amendments may need to be made. This may be as simple as an extra point due to an employee having more years’ service than the employer initially thought, or could be more complex – i.e. an employee believing they have skills/qualifications/experience which has not been included in their score. You do not always need to amend scores, but you do need to be able to demonstrate that you took their feedback seriously and gave it proper consideration.

Once you have agreed the scores, you can then move on to reviewing the rationale for the redundancy situation and ask the employee if they have any further proposals they may want you to consider which they feel may avoid the need to make compulsory redundancies.  If so, examine these issues with them – they may raise valid points and in some circumstances the consultation process may progress into a fourth meeting (although this is rare) in order to fully address these points.

 Document discussion

It is important to document this discussion and, if possible, discuss the viability of any suggestions and assess whether it could provide a workable solution.  You should avoid making comments which dismiss these proposals out of hand.  

Alternative employment 

If the employee has no proposals or suggestions to make, then one of the final stages is to consider alternative employment for them. This is any alternative employment which the employee is capable (with a reasonable amount of training) of carrying out.  It is very important for you to demonstrate that you have complied with this requirement, as a failure to do so can amount to unfair dismissal. 

Alternative employment must be considered and offered to the employee even if it amounts to a deduction in wages or status.  It is the employee’s decision to reject the offer, not the employer’s. It is very important to document offers of alternative employment in the consultation meeting notes. Any offers of alternative employment have a statutory trial period of four calendar weeks.

Payments

Employees with at least two years’ service are entitled to a statutory redundancy payment if they are made redundant, in addition to notice pay, pay for accrued annual leave, and any other relevant termination payments. Check your contracts to make sure there are no other enhanced contractual entitlements in redundancy situations. You can show employees a draft financial statement and explain that these are estimated payments which they would receive if proceeding with a redundancy dismissal is deemed necessary.

Concluding the meeting 

Before closing the meeting ask the employee whether they have any further points, questions or concerns they wish to raise before any final decision is taken. Inform them that you will carefully consider all points that have been made and make a decision as soon as possible. It’s best to provide an outcome within 24-48 hours.  

Remember that redundancy is a difficult process for both the employer and the employee, so thank them for attending. Remind the employee that should you make a decision to terminate their employment that they do have a right of appeal.

Note the start and end time of the meeting in the written minutes.

Dismissal should only be confirmed once a thorough consultation has taken place. 

Those whose job is “at-risk” of redundancy should be included in the consultation process.

Redundancy pool

This is sometimes termed the ‘Unit’ or ‘Pool’ of redundancy and identifies the group or groups potentially affected by job redundancies. It may be limited to one job, or to a group of jobs within a department or section, or across the board throughout the organisation.

The pool of “at-risk” employees should be fairly identified. In this respect, employers have a lot of flexibility, provided they act from genuine motives and can logically justify their selection. It could be unfair to artificially restrict the pool by not including employees engaged in similar work, and the employer will need to have justifiable reasons for excluding a particular group of employees from the pool, where the excluded category does the same or similar work to those who are at risk.    

However, there are instances where the employer will need to exercise care in deciding the appropriate unit. This is particularly relevant where:

• There is some versatility or flexibility amongst the employees affected by the redundancy, or their roles are interchangeable
• Where the employer has a number of employees who have similar skills or employees doing similar roles but spread over several departments. In this instance, it may be necessary to merge all groups together.
• Whether the employee’s inclusion in the unit is consistent with their previous position.
• Whether the selection unit was agreed with the union.

 Identification of the pool can be critical in demonstrating fairness, as a dismissal could ultimately be unfair if not all appropriate roles were placed at risk and included in the consultation process.

Once the pool has been identified, you can set the date and invite the employees to the first meeting.  

Knock-on effects

It is important to assess the knock-on effects of making a job redundant. A redundancy may result in a reduction of work elsewhere and thus, possibly, further redundancies. Or, there may be a need to absorb the residue of the redundant job within other roles, which in turn could lead to a requirement for further training.

If, for example, you no longer need the role of a marketing assistant, but there is crossover in the work they do with other roles (e.g. a marketing officer/manager), all should be included in the redundancy pool. To fairly decide who should be kept on and who should be made redundant, selection criteria should be applied. 

Consultation and selection 

The most common solution is to choose a set of criteria which may be a mixture of objective criteria, which can be readily checked, and points for skills which are deemed essential to the needs of the business. You can use as many criteria as you wish. However, it is important to bear in mind that employment tribunals like to see criteria that are simple, easily implemented and objectively fair. If the criteria appear overly technical or unduly weighted, then a tribunal may view them as having been contrived to achieve a pre- determined result and thus rule any dismissal to be unfair. The overall test is one of reasonableness, and the reasonableness of any particular criterion will always be a question for a tribunal to decide in view of the particular facts of the case.

It is important to note that consultation and selection are of equal importance and if an employer applies equally fair criteria without any consultation, then this can also make subsequent dismissals unreasonable.

Alternatives before selection

However, before embarking on scoring employees against criteria it is still a fundamental requirement that even before the first consultation you seek viable alternatives such as voluntary redundancy or early retirement, reduction of sub contracted work.

Although there is no statutory obligation to offer the employee the right to appeal a redundancy dismissal, it would be advisable (and best practice) to ensure that the employee has the opportunity to challenge the decision. Also, failure to provide an appeal hearing could make a dismissal unfair. As such, the employee should be invited to an appeal meeting to discuss this.

Where selection criteria were used to choose from a pool of employees, the appeal process will involve showing them how they scored in the selection and how this compared with other affected employees.

If there is a contractual redundancy policy then this should be checked as it may provide details of the procedures to be followed, or of any rights in excess of statutory provision.

 Requesting an appeal 

Any request for an appeal must be in writing. If the employee presents their appeal out of time, you can refuse to hold an appeal hearing (provided the company has given the employee a reasonable time limit in which to present the appeal, e.g. a week).  If the employee is only just out of time, it is good practice to grant the appeal hearing. 

A template letter to invite an employee to a redundancy appeal meeting is available here. 

The purpose of an appeal

The process gives the employee a further opportunity to state their case and, in that respect, may serve to remedy any perceived injustices that they may harbour over the way the redundancy consultation or selection process was conducted.

If there were procedural defects in the original decision to dismiss, a properly held appeal may cure those defects and prevent the dismissal from being held to be unfair.  The way to do this is to conduct a full re-hearing of the case by those not previously involved.

Common problems and defects in the redundancy procedure are:

• Failure to consult adequately with the employee.
• Failure to provide copies of selection criteria scoring or that of other employees in the selection pool.
• Challenges to the rationale for redundancy.

If the employee does not attend the appeal, and does not contact the appeals officer in advance, then you may be able to dismiss the appeal and not offer another opportunity, unless the employee has a good reason for missing the original hearing. 

Holding the meeting 

The following key steps can be followed during an appeal hearing:

1.     Explain the purpose of the meeting

2.     Identity the parties present and their role

3.     Review the evidence, i.e. the redundancy procedure followed – in writing or by calling witnesses

4.     Allow the employee to ask questions

5.     Allow the employee to call witnesses (if relevant)

6.     Listen carefully to the arguments raised

7.     Adjourn the meeting to consider your decision

8.     After any further investigation, respond in writing.

The purpose of the meeting 

Unlike the initial redundancy consultation process, the appeal hearing has been requested by the employee. As such, there is a significant change of emphasis, as the employer has already proven their case by following the correct notification, consultation and selection procedures.

It is now for the employee to state their case and establish that the decision to terminate their employment on the grounds of redundancy was incorrect or unfair.

Remember, the appeal hearing gives the employee the opportunity to question the decision-making process. The usual arguments presented by employees are that the manager making the decision to terminate on the grounds of redundancy failed to take all relevant information into account; crucial evidence regarding their qualifications or experience, or reasons for absence were not taken into account by the manager; or, that the manager was biased.

Re-examining the facts

An appeal hearing for a redundancy should take the form of a complete re-examination of the facts and an examination of the process followed, to ascertain whether there were any fundamental defects or relevant points that had been overlooked, that might cause the organisation to make a different decision.

If any procedural defects have been identified from the original hearing, the appeals officer should conduct a complete re-examination of the process to ascertain whether these defects would have made any difference to the overall decision. For example, if the employee is alleging that the redundancy was a sham, the appeals officer will need to undertake a full investigation of the rationale used to justify the need to make redundancies.

To cure any defects in the original hearing and minimise the risk of successful unfair dismissal claims being raised, make it clear in your notes and to the employee that you are doing a complete re-examination of the entire process and that the meeting will be a re-hearing.

Any additional evidence should, in the interests of fairness, be presented before the hearing. This evidence can either be for or against the employee. However, if it is detrimental to the employee’s case, they should be given every opportunity to give their comments.

In exceptional circumstances, it may be preferable to reconvene the appeal hearing. The same principles should apply if the employee presents evidence at the last minute (remember - fairness is a two-way process), the appeal should be adjourned part-heard to allow the employer to conduct further investigations.

It's important to remember that the employer can only rely on evidence that has been heard by both parties to support the reasons for a fair dismissal.

The parties to an appeal hearing

Chair of the Hearing

The person chairing the appeal should be someone who has not been involved in either the selection or consultation process. A note taker should accompany the appeals officer.

A tape recorder should only be used at the hearing if both parties expressly consent to this, and a copy of the tape and transcript are provided. To ensure the security of the evidence, the employer should do any tape recording.

It is permissible to call the managers who were involved in the selection and consultation process to present the organisation's case to the appeals officer. It must be emphasised to the employee and clearly stated in the minutes that these organisational witnesses will take no part in the decision-making process.

Interaction between the original decision-maker and the appeals officer must be kept to a minimum. If the case proceeds to tribunal, the employee’s representative will try to establish that there has been considerable discussion and that the appeals officer did not come to the appeal with an open mind. Avoid this by minimising your discussions about the merits of the appeal.

If you are from a small company, and there is nobody else of suitable managerial status who can conduct the appeal, then you should conduct the appeal yourself rather than not allow any appeal at all. However, it’s best to try and avoid this as much as reasonably possible.

Representation

The employee has the statutory right to be accompanied at the redundancy appeal hearing by a fellow employee or trade union official. The appeals officer is permitted to verify the credentials of the union representative by requesting that they produce evidence of their identity and role within the union.

An employee does NOT have the statutory right to be represented by a solicitor, or any other person, e.g. family friend. However, please check your own appeals policy to establish if employees have contractual rights in excess of this statutory provision. Also, consider whether it could be a reasonable adjustment for an employee with a disability.

In exercising these statutory rights, the employee must be allowed to confer with the representative during the hearing; the representative has the right to address the chair and make representations on behalf of the employee.

A representative is not permitted to cross-examine witnesses, nor to deliberately obstruct the hearing, or answer questions on behalf of the employee. Any questions to the witnesses must be submitted via the appeals officer. Remember, it is the employee’s evidence you are considering, not the representative’s.  If the representative wishes to clear any ambiguity, they can do that later via a submission to the appeals officer.

Hearing the appeal

You may want to open the meeting with the following remarks:

“I understand that you wish to appeal against the organisation's decision to terminate your employment on the grounds of redundancy on the (date of original decision).  I will hear the appeal, but I will not make a decision today.  This hearing will take the form of a complete re-examination of the entire consultation and selection process (if appropriate). Will you please now explain as briefly and precisely as possible the grounds for your appeal?”

Introduce all parties, explain their role and confirm to the employee that you have not discussed the facts surrounding their redundancy termination with the original decision maker. Explain that you are going to re-examine the evidence, listen to everything the employee has to say and then make a completely fresh decision.

From there, the following points should be covered in the meeting:

• Ensure that any documents that are presented to the appeals officer are carefully examined, photocopied and retained. It is preferable that both parties sign and date them to certify the document as a true copy.
• The appeals officer is permitted to ask the employee questions or test their evidence. The appeals officer should allow the employee the opportunity to explain any inconsistencies in their evidence. An employee’s failure to answer questions will strengthen the case for denying the appeal. If the employee is evasive, repeat the questions and warn them of the inferences that can be drawn from evasiveness.
• Conclude the meeting by informing the employee that you will carefully consider all the evidence and you will contact them over the next few days with your decision. Do not be pressed into giving a preliminary answer or indication of your decision.

Following the meeting

Once the hearing is over, you should consider the evidence afresh. When considering your decision, you should not be concerned whether the original decision was right in the circumstances, but whether it was a reasonable one in the circumstances.

Consider each of the points raised by the employee and their representative and decide whether it indicates bias or inappropriate considerations or selection by the original decision maker. Then decide whether the original decision to make the employee redundant was a reasonable one.

If, on the other hand, the appeals officer feels that the original decision was unreasonable, that the process used was flawed, or that the decision maker was biased, then reinstatement must be considered unless the flaws in the process make no difference to the decision. This might be the case if the employee’s selection criteria score is amended but they are still the lowest scorer.

An outcome should be confirmed to the employee in writing as soon as reasonably possible after the meeting. 

• Letter to confirm redundancy dismissal upheld due to unsuccessful appeal

• Letter to employee to confirm re-instatement due to successful redundancy appeal

This differs from ‘suitable’ alternative employment (see below). For this, the employer is required to offer any alternative employment which the employee is capable of doing. It is for the employee to decide whether or not they wish to accept the offer. 

It is advisable to communicate the offer of alternative employment in writing, with sufficient detail of the vacancy to allow the employee to make an informed decision. There is no requirement that the offer of alternative employment must be the same status or pay as the employee’s previous role. The requirement is on the employer to offer alternative roles and avoid making any assumptions as to whether the employee would find such offers acceptable. 

Employee refuses offer of alternative employment 

However, an employee’s refusal to accept an offer of alternative employment will not usually have any impact on their entitlement to receive a statutory redundancy payment. This is because the offer is not “suitable” or reasonable based on their individual circumstances.

The following recommendations are made as regards alternative employment:

• Do not assume someone wouldn't be interested in alternatives that are available, even if they are lower paid, lower status roles
• Different departments must communicate with each other about vacancies
• All those who are potentially redundant should be allowed to put themselves forward for potential alternative employment before any external advertisement takes place
• If someone can do the majority of an alternative role they should be offered the position with appropriate support and training for the part of the role they have no experience in
• All offers of alternative employment should be made in writing, spelling out the financial prospects of the role.

This differs from the concept of ‘alternative employment’ - see above. Before dismissing, you must offer any suitable work that is available elsewhere in the organisation or associated companies. It is for the employee to decide whether or not to accept.

Any suitable alternative work must not put employees at a detriment in terms of current pay; although it is acceptable to require them to remain on their current pay in the new role until the pay of other employees performing the same or similar jobs reaches the same level. If there is a loss of status involved, this can be eased by allowing an employee preferential treatment should a broadly similar position to the original job become available again.

Any change in location should be assessed to minimise the disruption caused in terms of increased expenses or travelling time. Mobility clauses within the employee’s contracts may not necessarily be enforceable. Changes in hours of work or in the working environment may need to take the individual’s personal circumstances into account.

If vacancies arise regularly in your organisation, you could consider retaining an employee, with their agreement, in a temporary capacity pending the availability of a suitable vacancy. 

Confirming offer in writing 

Any offer of suitable alternative work must be put in writing, identifying how the old employment differs from the new, and must be made before the end of the notice period of dismissal. The offer must be either to start immediately after the end of the old job or after an interval of not more than four weeks.

Employee refusal of alternative employment 

Where 'suitable alternative employment' is available, and is offered to an employee, and the employee unreasonably refuses it, the employer is no longer obliged to make a statutory redundancy payment.

What is 'suitable' is a two pronged test.

1. Firstly, it is an objective test as to whether the job would be suitable having regard to the skills and qualifications needed to do it, its status, pay and benefits.

2. However, it is also a subjective test from the employee's perspective which may depend on their personal circumstances. For example, often an employer who relocates has what it regards as suitable alternative employment for all the employees at the new site. However, an employee who walks to work may not want to spend an hour on a bus in future arguing that a long commute will affect their quality of life. These sorts of factors justify the employee refusing.

Under the law in force until new regulations are made, those on maternity leave who are at risk of redundancy must be offered suitable alternative roles in advance of others. This protection ends once the employee returns to work.

Under the Protection from Redundancy (Pregnancy and Family Leave) Act 2023, which became law on 24 May 2023 but will not come into force until regulations on it have been made, expected to be around April 2024, the above right of first refusal to any alternative work will be extended. This will mean:

• Employers will be required to offer pregnant employees, and those who have come back from maternity, adoption and shared parental leave until 18 months after the birth/adoption, a suitable alternative vacancy during a redundancy exercise.
• It will be unfair dismissal and discrimination if these employees are not favoured above all others in the redundancy exercise

Due to the practical and legal differences between shared parental leave, maternity and adoption leave this may mean that it will require a different approach, however protection will also be extended to those taking this leave. Further guidance is expected to be released on this. 

Fast becoming an integral part of the employee lifecycle, outplacement support is an invaluable tool employers can use to say thank you to employees affected by redundancy. Recognising that employees made redundant may not have been in the market for a new job for some time, many years in some cases, outplacement support helps outgoing employees with the skills and assistance they need in finding their next employment opportunity.

Usually provided during the notice period or shortly after, outplacement support ranges from CV writing skills, interview techniques, navigating modern job searches such as the latest job sites and making the most of LinkedIn, and how to utilise networking for their own success.

It can also help employees formulate their priorities and take stock of their options in light of this. It may be that the redudancy has been a prompt for career change or further study, and outplacement support can act as a neutral sounding board for these ideas.  

Unfair dismissal

Redundancy is one of the five potentially fair reasons to terminate an employee’s employment, as long as the following points are clearly satisfied:

• There is a genuine redundancy situation – if the issues relate instead to an employee’s performance, this should be managed in line with normal conduct/capability procedures, not redundancy.
• The employer has followed a fair procedure (i.e. consultation and fair selection)
• The employer has offered alternative employment, if any is available and explored all other potential options to try and avoid redundancy action.

What might make a redundancy dismissal unfair? 

If the above points are not clearly satisfied, employees with at least 2 years’ service may be able to raise a claim for unfair dismissal. If an employee believes that they have been selected for redundancy due to a protected characteristic (e.g. age, disability, pregnancy etc), they may raise a discrimination claim, regardless of how long they have worked with you for.

Generally, claimants will allege one or more of the following procedural defects:

• The redundancy was a sham exercise, planned and designed to terminate the claimant’s employment.
• The employer failed to consult, in other words, the claimant was terminated without any meaningful consultation meetings.
• There was an unfair selection: the employer failed to implement any selection criteria, or the criteria used were unreasonable, or the employer used fair criteria but applied them in an unreasonable way.
• There was a failure to take genuine and proper steps to find alternative employment or offer alternative employment where this was available.

Employees, however, can be dismissed fairly by reason of redundancy provided you follow proper procedures.

Those with less than the required length of continuous service to bring an unfair dismissal can bring a claim where they believe the reason for their selection for redundancy was unlawful (perhaps on the grounds of discrimination, because they were pregnant or on maternity leave, or because they acted as an employee representative). These claims can result in a basic award which is calculated in the same way as statutory redundancy pay and a compensatory award which is based on the employee's financial losses up to a maximum of £105,707. 

The main legal claims that an employer in a redundancy situation might face are for:

• a 'protective award' where the employer has failed to consult collectively with employee representatives: this award starts at 13 weeks pay (actual pay not the statutory capped sum of a week's pay) per affected employee and a Tribunal will only reduce that figure where it believes there is a good reason to do so. Such claims can be brought by the employee representatives until three months after the last dismissal.
• discrimination on the grounds of sex, sexual orientation, race, ethnic origin or nationality, religion or belief, age, disability or on the grounds of being a part-time worker or employee on a fixed-term contract: In the redundancy context, it is unlawful to select candidates for redundancy on these grounds or to treat them differently on these grounds. In particular, care needs to be taken to ensure that any selection criterion used do not have the effect of treating a particular group less favourably.
• an injunction to prevent you from breaching a collective agreement: trade unions are most likely to bring such a claim, arguing that there is a binding agreement dictating how a redundancy situation should be dealt with that you should honour. Such an action would be brought through the courts.
• statutory redundancy pay: Employees with two years' service are entitled to a redundancy payment based on their age, length of service and their weekly pay (up to a maximum of £643). Such claims can be made for 6 months following the dismissal. The maximum payment is currently £19,290 (for historic rates, please see our ‘Statutory rates’ page).
• contractual redundancy pay: If you have promised to pay an enhanced payment to employees, this contractual entitlement can become binding as a matter of custom and practice.

To avoid these legal risks, careful planning of any redundancy exercise will be required.