Carter, Caroline - Ashurst LLP
Overview

The Employment Rights Act 1996 defines a redundancy situation to be when the employer ceases to carry on the business in which the employee was employed; the employer ceases to carry on that business in the place where the employee was employed; the needs of the business for employees to carry out work of a particular kind cease or diminish; or the needs of the business for employees to carry out work of a particular kind in the place where the employee was employed cease or diminish. Detailed information on collective redundancies can be found here.

Key points

  • Redundancy is when, you shut down the business completely.

  • You close a particular part of the business, for example a team or department

  • You shut down at a specific location (even if you are moving to a new location)

  • You need less employees in a particular role (reduction in the size of the workforce).

  • 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.

Recent developments

New law extends redundancy protection to new parents

The Protection from Redundancy (Pregnancy and Family Leave) Act 2023 became law on 24 May 2023. 

Whilst it won't come into effect until regulations have been published on it, which is likely to be around April 2024, once they are in place this law will have the following impact: 

  • 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.

  • The right to be offered a vacancy in favour of any other employee already exists when on maternity leave.

  • It will be unfair dismissal and discrimination if these employees are not favoured above all others in the redundancy exercise.

The Employment Rights Act 1996 defines a redundancy situation to be when the employer ceases to carry on the business in which the employee was employed; the employer ceases to carry on that business in the place where the employee was employed; the needs of the business for employees to carry out work of a particular kind cease or diminish; or the needs of the business for employees to carry out work of a particular kind in the place where the employee was employed cease or diminish.

In other words, it is when:

  • You shut down the business completely
  • You close a particular part of the business, for example a team or department
  • You shut down at a specific location (even if you are moving to a new location)
  • You need less employees in a particular role (reduction in the size of the workforce).

Throughout the redundancy process, it’s important to keep in mind that it is a job or role which is being made redundant, not an individual employee. For example, saying we want to make “Joe” redundant could make it seem that the outcome is pre-determined, so risks claims for unfair dismissal. Instead, you should always say we need to make the “marketing assistant” role redundant.

It is important to note that the ending of a fixed-term contract (FTC) can be a redundancy situation (Pfaffinger v City of Liverpool College ) although it is not likely to be a redundancy if the FTC was a temporary one to cover someone else's absence and that person is returning to work (Greater Glasgow Health Board v Lamont). It will depend on the facts of the case and is likely to turn on why the fixed-term contract is not being renewed and whether that relates to individual choice or a business decision.

An employer's proposal to make changes to terms and conditions of employment can also be a redundancy situation (GMB v Man Truck). This is the case where the changes relate to the nature and the duties of the job. 
 
Importantly if a position is replaced it cannot be a redundancy situation.
 
You may have an express 'mobility' clause entitling you to require employees to move location. If you rely on such a clause, then the situation will not be a redundancy situation, but only if it is reasonable to exercise this clause. 

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
You should consider if there are alternative measures that could be put in place to reduce the need for redundancies. These might be:
  • Reducing sub-contracting.
  • Temporary lay-offs or short-working (more information can be found here).
  • Changing terms and conditions such as a wage freeze, wage cut, reduction in bonus or pension contributions.
  • Increasing prices to customers.
  • Reducing supplier costs.
  • Increasing sales or contract opportunities.
  • Selling unprofitable parts of the organisation as a business transfer.
  • Freezing recruitment.
  • Banning ad-hoc overtime.
  • Accepting voluntary reductions in pay or working hours.
  • Considering whether any employee whose job might be redundant can be transferred elsewhere within the company or whether the employee can be retrained to carry out other types of work.
  • Ceasing temporary contracts, the use of agency staff, and casual staff. 

It is important that full consideration be given to all or any of these alternatives, together with other options suggested by the workforce during consultations.

Additionally, before proceeding with compulsory redundancies (i.e. dismissing an employee), it’s best to ask if anyone would be interested in applying for voluntary redundancy.
 

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.

This information should be read alongside the above section on initial planning

General considerations 

There is no reason why employees on maternity leave, paternity leave, adoption leave or shared parental leave may not be considered for redundancy. However, the fact that an employee is on maternity, paternity, adoption or shared parental leave and may not be able to work for some time should not itself be the reason for selection for redundancy. Extreme caution must be exercised in order to prove this is not the case.

The main point to keep in mind is that employees absent on family friendly leave should not be treated unfavourably. This is the case even if the employee has implied that they won’t be returning to work after taking the leave.  During a redundancy process they have special legal protection and the right, in some instances, to preferential treatment.

Other key points to remember are:

  • It is discrimination to treat an employee unfavourably for a reason relating to pregnancy or maternity leave;
  • An employee on family leave who is at risk of redundancy has the right to be offered any vacancy that is suitable and appropriate for them before their colleagues – a failure to offer such employment, and provide preferential treatment in this regard, can make a dismissal automatically unfair;
  • It is automatically unfair to dismiss an employee, or to select them for redundancy, for a reason relating to pregnancy or family leave;  
  • Dismissal can also be automatically unfair if related to the taking of other family leave (parental/adoption/paternity leave or time off for dependants); 
  • It is an unlawful detriment to subject an employee to a disadvantage short of dismissal for a pregnancy or family leave related reason (e.g. reduce their terms and conditions).
Pool and selection criteria 

If they were in work, then they would be included in the pool, and so they should be if on leave. 

In terms of selection criteria, it is very important to exercise extreme caution.

When selecting employees for redundancy, the employer must take care not only to avoid unfavourable treatment of employees on maternity, paternity, adoption or shared parental leave, but must also avoid unwarranted direct favouritism of such employees. In Eversheds Legal Services Ltd v De Belin, the employer gave a woman on maternity leave the maximum notional score for one of the redundancy selection criteria because her performance under that criterion could not be measured due to her absence on maternity leave. As a result of this, she achieved a higher overall score than her male colleague by half a point and he was selected for redundancy. He claimed that his selection was discriminatory on the grounds of sex.

The employer argued that giving the woman on maternity leave a favourable score compared to that of her male colleague could not amount to sex discrimination on account of s.2(2) of the Sex Discrimination Act 1975 (now s.13(6)(b) of the Equality Act 2010). This section provides that “no account shall be taken of special treatment afforded to women in connection with pregnancy or childbirth”, ie men cannot claim sex discrimination as a result of special treatment afforded to women on account of maternity leave. The EAT rejected this argument and ruled that the obligation to protect employees who are pregnant or on maternity leave relates only to what is “reasonably necessary to compensate them for the disadvantages occasioned by their condition”. The obligation cannot extend to any favourable treatment, but rather only to treatment that represents proportionate action to compensate women for the disadvantages caused by pregnancy or maternity leave. In this case, the female employee had been given an unfairly inflated score in the redundancy scoring exercise and this action went beyond what was reasonably necessary to protect her, and was therefore not proportionate. The EAT thus ruled that the claimant had suffered unlawful sex discrimination.

The following considerations should be made when applying selection criteria to pregnant employees and those on family leave:

Attendance records

If you intend to use the absence records of all employees as a criterion, then the following points need to be factored into the scoring process:

  • Any absences for ante-natal care or medical appointments related to the pregnancy should not be included.
  • Any absences due to a pregnancy-related illness or to maternity leave must be disregarded, otherwise it may be unlawful discrimination and, if it leads to the dismissal of the employee, it may render the dismissal automatically unfair.

Training & Experience

If attendance is used as a criterion and the employee is marked down because they were unable to attend training sessions or unable to gain particular experience due to any pregnancy or maternity related absences, this could amount to discrimination and make the dismissal unfair.

Length of service

If length of service is used, then the whole of the employee’s period of employment should count without any reduction for any period on maternity leave. During maternity leave, the employee’s continuity of employment is preserved. To calculate otherwise could amount to discrimination.

Lateness

Any scoring of lateness for a pregnancy-related reason, i.e. morning sickness, doctor’s appointment, ante-natal classes, etc. could again amount to discrimination and make the dismissal unfair.

Consultation meetings 

Any failure to involve an employee on maternity, paternity, adoption or shared parental leave in the redundancy process (eg not consulting them about possible redundancy) can make their selection unfair. A failure to consult an employee on maternity leave will also constitute unlawful sex discrimination. The requirement during a redundancy process is for the employer to consult with the workforce. There are no exemptions based on the size of the business or its resources. A pregnant worker or worker on maternity leave must be afforded all the rights, entitlements and courtesies extended to all the other employees involved in the process.

This means that the employee must be given the same information and the same opportunity for consultation as they would have had if they weren’t on leave. In respect of the timing of the consultation process the employee should be told at or near the time of the other employees in the pool. It is important that the employer treats these obligations seriously as a failure to do so will almost always lead to a discrimination claim and, if the employee is made redundant, an unfair dismissal claim.    

However, consultation should be approached carefully and sensitively, particularly if the employee is heavily pregnant, is off sick, has recently or is about to give birth, or there are complications with their child. Reasonable efforts should be made to adapt the procedure to enable them to take part.  For example, if they are already on maternity leave, it may be reasonable to conduct the consultation meetings at the employee’s home, via virtual platforms (Skype, Zoom Teams etc) or in a neutral location, like a coffee shop.

The employer may also need to take into account any particular difficulties, such as childcare, that the employee may have when arranging meetings; the consultation process may need to be adapted to ensure that the employee is not prevented from participating fully. It is important to remember that the obligation is on the employer to consult and not on the employee. In some cases, it may be reasonable to ask the employee to provide written submissions to the proposed redundancy plan and allow questions and concerns to be answered via email or letter. 

Ensure all meetings are minuted and signed by all parties.  If the employee refuses to sign the notes, then amend the minutes to reflect the fact that the minutes were offered and employee declined to sign.

Don’t forget, as with any other employee, those who are pregnant or on maternity leave have the right to be accompanied by a trade union official or a fellow employee if they wish.

Alternative employment 

If the selection process results in the employee being identified as more at risk of redundancy, then they are entitled to be offered any alternative employment provided:

  • It is suitable and appropriate for the employee, and
  • The terms on which it is offered to the employee are not substantially less favourable than their old terms and conditions.

This is the case irrespective of whether the employee is ready at that point in time to return to work. This means that such an employee in effect has first refusal over all other employees even if they are not necessarily the best candidate for the vacant post in question. 

If the job is suitable and appropriate for the employee and they are not offered it, the dismissal will be automatically unfair. The maternity legislation therefore puts the employee in a preferential position over other employees who have been selected for redundancy, even if they are better qualified and even if there are good business reasons for the employer to want to select another candidate.

The House of Lords (Brown v Stockton on Tees BC [1989] ) held that an employer faced with deciding which one of several employees to make redundant must disregard the inconvenience that inevitably will result from the fact that one of them is pregnant and will require maternity leave. If the employer does not do so and makes that absence the factor that determines the pregnant woman’s dismissal, that dismissal will be deemed unfair (now sec 99 ERA 1996) 

If the employee unreasonably refuses the offer of suitable alternative employment, then they can be dismissed by reason of redundancy but may lose their right to a redundancy payment.  Whether the job is “suitable” and whether the employee is unreasonable in their refusal will depend on the particular job and the employee’s personal circumstances. Matters such as the rate of pay, hours of work, status, and travel are relevant factors. 

Reform 

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

Payments

Notice Pay

The Employment Rights Act 1996 provides for protection of notice pay ‘in respect of any period during which the employee is absent from work wholly or partly because of pregnancy or childbirth.’ (Sections 86-91). However, this does not apply where the contractual notice period required from the employer is at least one week longer than the relevant statutory minimum. Employees with contractual rights in excess of the legal minimum will NOT, therefore, benefit from the statutory right to notice pay.  

However, the employee is entitled to be paid during their notice period at the rate of their Statutory Maternity Pay (SMP) (or statutory adoption pay (SAP) and shared parental leave pay (SHPP)) or contractual family related pay if they were receiving this at the time of termination.

If the employee’s contractual notice is less than a week longer than her statutory notice entitlement then the employee is entitled to full pay for the statutory notice period.  They will then be entitled to their statutory family related payments such as SMP for the remainder of the contractual notice period if they are entitled to it.  

Example One:

Mrs Brown has been employed by ABC Ltd for two years.  Her contract provides for one month’s notice.  As her contractual notice period is a week or more longer than her statutory notice period (which would have been two weeks), then Mrs Brown is entitled to only maternity pay during her notice period.

Example Two:

Mr Black has been employed by ABC Ltd for four years.  His contract provides for one month’s notice.  As his contractual notice is less than a week longer than his statutory notice (which would be four weeks), then he is entitled to full pay for the statutory notice period.  He will then be entitled to adoption pay for the remainder of the contractual notice if they are entitled to it, which would be approximately 3 days SAP.

Example Three:

Miss White has been employed by ABC Ltd for six years.  Her contract provides for employees with five or more years’ service to receive notice of one week per complete year of service, i.e. six weeks’ notice.  As her contractual notice is the same as the statutory notice, Mrs White would be entitled to full pay for the statutory notice period.

In all the above cases where full pay is paid, this would be either SHPP with wages topped up to reflect contractual full pay, or with the SHPP offset against the full notice pay.

Statutory Maternity Pay 

Provided the employee has satisfied the earnings and service criteria, she will remain entitled to SMP should her employment end for whatever reason after the beginning of the 15th week before the Expected Week of Childbirth (EWC). SMP lasts for a maximum of 39 weeks.  Once entitlement to SMP is established it cannot be subsequently lost due to the employee being made redundant.

If the contract is terminated before the 15th week before the EWC then SMP is not payable.

The Maternity Pay Period (MPP) starts on the Sunday after the week in which the employee’s employment ends or the Sunday of the 11th week before the EWC, whichever is the later.

SMP payable to an employee after the contract of employment has ended can be paid as a lump sum or at the same interval as the employee’s regular earnings (i.e. weekly pay/monthly pay).  If payment is made as a lump sum then this is taxable under PAYE and the SMP should be included in the figures issued on the P45.  If payments are to continue in the same interval as the employee’s former regular earnings then the P45 should be issued when the employee is made redundant and any further payments taxed at basic rate.

However, provided the employee does not request her form P45, then PAYE can be deducted from payments of SMP using the normal code number and preparation of Form P45 delayed until the final payment is made.  The date of leaving on Form P45 will then be the date on which the final payment of SMP is made.

Employers should be aware that if they use the latter option then the employee will remain on the books and the date of termination is the expiry of the maternity pay.  This means that the employee will continue to accrue other statutory rights such as annual leave.

Holiday Pay

Holiday pay continues to accrue at contractual rate during both ordinary maternity leave (OML) and additional maternity leave (AML). Any holiday pay due to the redundant employee must be calculated up to the expiry of the statutory notice period.

Claims

It is important to bear in mind the multitude of claims available to an employee dismissed or subjected to any detriment in connection with pregnancy or maternity leave. 

These include:

  • Sex discrimination (compensation for this is unlimited);
  • ‘Automatic’ unfair dismissal;
  • ‘Ordinary’ unfair dismissal (provided the claimant has 2 years’ service to claim);
  • Wrongful dismissal, which relates to the details of the employment contract;
  • Dismissal in connection with asserting health and safety rights – provision would apply where the employee is dismissed because they leave or propose to leave the place of work, because they believe they are in serious and imminent danger, for example, they walk out because they believe the work environment poses a hazard to them or their unborn child;
  • Dismissal in connection with asserting a statutory right – e.g. such as rights to ante-natal care, time off to care for dependants or other maternity or parental rights.

 An employee may find that their dismissal in connection with pregnancy does not necessarily qualify as automatic unfair dismissal where they return from additional maternity leave and, although there is no redundancy situation, it is not reasonably practicable to allow them to return to the same job or to a suitable alternative job. If they then unreasonably refuse a suitable alternative job from an associated employer, any resulting dismissal would not be automatically unfair. 

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.
Fair consultation will involve giving the affected employees a fair and proper opportunity to fully understand and consider the matters they are being consulted on and to discuss any concerns or express their views. You must be willing to take on board their representations and perhaps amend your proposals to show that you have done so. Ultimately, you are not required to accept any suggestions made by staff but evidence that employee concerns have been addressed will always assist you in any Employment Tribunal proceedings that are subsequently brought.
 
Consultation must be a genuine exercise. For that reason it would not be appropriate to issue notices at the beginning of consultation as it suggests that the employer's mind is made up. The statute refers to 'consultation with a view to seeking agreement' which suggests the consultation process should begin before drawing up definite redundancy plans. The case of Middlesborough v TGWU shows that consultation should commence about ways to avoid dismissals before the decision to make compulsory redundancies has been reached. Although redundancies may be the ultimate outcome, you should not be closed to considering alternatives. The Middlesborough case shows that it is not open to you to argue that consultation would be futile or 'wouldn't make any difference'.
 
In 2007 the Courts reversed previous case law and found in UK Coal Mining Ltd v NUM that there is a duty to consult over the reason for making redundancies in the first place. This suggests that the appropriate representatives can challenge an employer's decision making process and argue that redundancies are not necessary.
 
It is a statutory requirement that the collective consultation must address the following:
  • ways to avoid dismissals
  • ways to reduce the number of employees being dismissed; and
  • ways to mitigate the consequences of dismissal on the affected employees.
You should also consult about the proposed method of conducting the redundancy process. If staff have agreed to the process you are following it will be harder for them to criticise it later.

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 
 
If there are multiple roles at risk (e.g. due to the closure of a full department), the first meeting can be held as a group meeting. For single post redundancies, this will likely be an 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 that can be used to apply for voluntary redundancy is available here

The particular role 

You should explain why their particular role is at risk – this should be relatively straightforward in full team/business closure situations. But, for single post redundancies, you should get their agreement that there is nobody else in the business who does the same/similar role, so should also be included in the redundancy pool and consulted with.

Agree follow up  

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 the risk of an unfair dismissal claim.   

This letter will confirm that the employee is 'at risk' of dismissal, and why they are at risk. 
 
Second meeting 

Employees have a right to be accompanied by a fellow employee or trade union representative at this consultation meeting. Since less than 20 redundancies are proposed, 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 employee. If there are any ambiguities, clarify them at this stage.  

You may need to explain again the reasons why the employee’s position is 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; a tribunal is entitled to investigate whether the redundancy situation is genuine.

Time for 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.  

Responding to 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.

Inviting employee input  

Explain to the employee that this is their opportunity to put forward any suggestions which they feel are relevant and may avoid the need to make job losses. It is important to note all suggestions and responses 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.

Planning next steps 

Set a date for the third meeting before closing.  In some cases, the employee may not have any objection and has accepted the need to make the position redundant and agree that there is no alternative employment.  

Final consultation and dismissal notice 

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

Review the consultation so far 

You can review the rationale for the redundancy situation and ask the employee if they have any final proposals they may wish you to consider which they feel could 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.

Minutes are essential 

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.  It is important to avoid making comments which dismiss these proposals out of hand.  Any decision on the merits of the employee’s suggestions can be made after the meeting once a full consideration of the suggestion has taken place.  

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. 

Discussing 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.

Notice should only be served once the above has taken place. 

"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. 

 

It is crucial that an employer is fair in how those who are to be made redundant are selected. While an Employment Tribunal may be unlikely to challenge a genuinely held belief that redundancies are necessary, they will scrutinise the way in which you go about choosing those who are made redundant.
 
The selection process is an integral part of the redundancy consultation procedure and applies when the employer is contemplating either single or multiple redundancies and is selecting candidates from a pool of staff.
 
It is down to you to determine the most sensible way to achieve a fair outcome. Some organisations decide to allow staff to apply for the remaining jobs, treating selection for those jobs as akin to a recruitment exercise. Others choose the more traditional method of assessment against a matrix of skills or 'selection criterion'. 
 
A failure to follow a fair selection procedure may give rise to a successful unfair dismissal claim. 

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.

It is very important that you act fairly in defining the grouping of employees from which selection or assessment for redundancy will take place.
 
At its simplest, if you have 10 staff making widgets and you need to lose five, the 10 staff would be the unit of selection. However, if there are different processes and machines involved, it may be that you would prefer to define the unit in a different way, such as 'all those who work on X machines' which might only be a pool of seven. You would have to show that those working in that unit genuinely do something different to the wider group as it is fairer if all those performing a similar function are viewed together.
 
In the management context it is important to look at the jobs people actually do as well as what their job descriptions say they do. For example, if groups of employees have interchangeable skills and routinely cover for each other when they are on sick leave or holiday, it would be unfair to separate them out just because your organisation chart shows them separately.
 
It may be appropriate to divide units on geographical lines, for example, for sales staff. However, this may not retain the skills you need going forward and it could be fairer to consider the whole pool of sales staff for selection for redundancy and reallocate regions afterwards.
 
You have considerable freedom to define the unit of selection in a manner which works for you provided that it falls within the 'range of reasonable responses of an employer' and you can justify why you have chosen the method you have.

The key to justifying selection criteria is objectivity – removing as far as possible the scope for personal opinion to invade the selection process. 

Attendance or sickness records, length of service and disciplinary records are traditional methods of selection, but in a competitive business environment are rarely sufficient on their own. You are likely to want to hold on to key employees in order to retain vital skills within your organisation.

‘Last In First Out’ (LIFO)

Aside from your needs, selection based solely on length of service, such as ‘Last In First Out’ (LIFO) is no longer advisable. This is because it can discriminate against younger employees who have had no opportunity to accumulate long service periods. In some organisations too, shorter service employees may be predominantly female, and this can lead to indirect sex discrimination claims. 

LIFO may result in an unwelcome loss of essential skills. In the event of a tribunal claim you will likely have to justify that a length of service criteria meets some objective business need, and this is hard to demonstrate if it’s been used in isolation. In short, the need to retain a balanced workforce and to show fair selection for redundancy is unlikely to be achieved by an over-emphasis on length of service.

Selecting criteria 

The criteria should ideally comprise a balance of simply-measured factors which are not discriminatory, alongside additional criteria relating to the specific skills required for the remaining work. Length of service, disciplinary record and timekeeping have the advantage of being measurable and difficult to challenge and are thus likely to be included in your final list.

You will need to spend some time considering how the skills you need can be fairly measured and what evidence you will have to support the scoring decisions you make.

Documenting process 

It is imperative to ensure that the selection process is documented and managed so that all those making assessments are working to the same definitions and measurements and can show the reasoning behind their judgements.  

Fair procedures 

Employment tribunals will take into account the size and administrative resources of the employer when judging the fairness of the selection criteria used. However, the safest method for employers of all sizes is, wherever possible, to award employees points against a fairly constructed set of criteria and dismiss those who score the lowest.  If you are consistent and objective, the dismissal will in most cases be justifiable. There is no exemption from this requirement for fairness and objectivity for small employers.

Criteria to avoid

Attitude 

This is extremely subjective and almost impossible to measure. You need to consider how you would justify the opinion of the manager making the assessment. For example, how could you explain the difference between a score of 2/5 and 3/5 for attitude?  If an employee’s attitude is unsatisfactory then a tribunal would expect the issue to be dealt with by way of a disciplinary process. Scoring on the basis of live disciplinary sanctions which have already been fairly issued is entirely acceptable. 

Potential discrimination 

Factors which must be excluded are absences due to pregnancy and maternity rights or disability, and anything else that could be construed as discriminatory: age, disability, gender reassignment, marriage and civil partnership, pregnancy or maternity, race, religion or belief, sex or sexual orientation, trade union activity, the assertion of statutory rights (such as requesting written terms and conditions of employment), the raising of health and safety issues or the making of, or seeking to make, a qualifying disclosure under the Public Interest Disclosure Act. 

Reasonable adjustments 

Exercise particular care when considering the use of a factor such as rate of work, quality of output or attendance records which may be affected by an employee’s disability or pregnancy related reasons. Reasonable adjustments may need to be made when applying the criteria to employees with a disability or those who are pregnant.

Employee input 

Any selection procedure proposed must be agreed with the affected employees or their representatives during (or before) consultations. If the criteria have been agreed at the outset this can minimise claims for unfair selection.

Particular care needs to be taken to avoid age discrimination. 'Experience' could work against young workers. You need to consider whether you can objectively justify that in choosing that criterion you are pursuing a legitimate aim (such as retaining corporate memory and skills) and that it is proportionate to do so and that there is not a less discriminatory way of making the selection.
 
Whilst 'last in-first out' may be popular amongst staff it is potentially discriminatory on grounds of both age and sex, working against younger workers and women who have taken time out having children. You would need to objectively justify using it, which may be difficult as it is arbitrary and doesn't focus on skills you need in future.
 
Some employers sometimes use a 'recruitment' style approach to redundancy selection, asking employees to apply for the remaining roles and interviewing them or setting assessment tasks similar to the approach used in a recruitment exercise. While this is an acceptable method to use, care needs to be taken to be fair to the employees concerned. For example, a failure to take into account past appraisals or the views of managers who worked with employees would be unfair.
 
If all the posts in a particular area are going, no selection exercise will be necessary: All those occupying those posts will be redundant. This can also be the case where a single post is affected and the role does not overlap with other roles.

Unfair selection

Selection will be automatically unfair if it is:

  • In breach of a customary arrangement or agreed procedure unless there are special reasons to justify departure from it.
  • Connected to Trade Union activity.
  • Discriminatory on grounds of sex, race, disability, age, sexual orientation, gender reassignment, religion/belief, marriage/civil partnership or pregnancy/maternity.
  • Related to whistleblowing, the raising of health and safety matters, Working Time Regulations or National Minimum Wage grievances.
It is important that you choose selection criteria that will enable you to retain the workforce with the skills that you need going forward. Often employees will argue that particular skills or attributes should be taken into consideration but these may not be important to the future of the organisation.
 
You must also be fair in the criteria you choose and the way in which scoring or grading takes place. The following is recommended that you:
  • consult about the criteria you propose to apply so the employees can influence the process
  • check whether you have an existing collective agreement or contractual procedure governing selection criteria. You would only be able to deviate from such agreed procedure where it is justified (perhaps because the procedure uses criteria that would now be viewed as discriminatory)
  • as far as possible, choose objective criteria which you can verify by reference to data such as appraisals or training records
  • avoid, as far as possible, subjective criteria which could come down to personal opinion
  • avoid directly or indirectly discriminatory criteria (such as age or the selection of part-timers or those on fixed-term contracts first). Selection of anyone taking leave for parental reasons, who is pregnant or has undertaken duties as a trade union or employee representative should also be avoided. You may need to adjust your scoring as regards absence levels or productivity for those with disabilities, those taking different forms of parental leave or those who have had time off for trade union or employee representation duties
  • ensure that more than one person conducts the assessment, or the original markers scores are moderated by someone else, to remove suggestion of personal bias and to double check all calculations, and make sure your score sheet or redundancy matrix has guidance notes indicating what competencies are necessary for each particular score to be attained
  • ensure any test you use for assessment purposes (for example to test speed and efficiency) is capable of adjustment for those with disabilities; and
  • weight the skills or qualities you are grading in order of importance to you.
In certain circumstances, it might be justifiable to retain an employee who would otherwise be redundant by virtue of their post disappearing. This can be done by slotting them into another role 'bumping out' the employee currently occupying that position. This may be appropriate where the employee who you wish to retain has skills and attributes that are key to the organisation, for example, they could be the only person who understands the IT system in a small company. However, such bumping must be done with care as it is unfair to the person who is bumped out and whose role would otherwise not be redundant.
 
In Leventhal v North a senior executive persuaded the Tribunal that his dismissal was unfair because the employer didn't consider bumping out a junior employee so that he could fill the position. Crucially, there was alternative employment for that junior employee. The Employment Appeal Tribunal said it would depend on whether there is a vacancy, how different the two jobs are, the qualifications of the person being made redundant, the relative length of service of the two employees, and any difference in remuneration as to whether it would be fair to allow bumping.
 
Employers should also be aware that keeping a senior long serving employee over one with shorter service could result in arguments of age discrimination.

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. 

 

Once an employee has been issued with a dismissal notice they have the right to reasonable time off with pay to look for new work or to undergo training for future employment and you must not unreasonably refuse such a request. The entitlement to such pay throughout the notice period is capped at two fifths of one week's actual pay.
 
If you were unreasonable in refusing an employee such time off, they could claim in an Employment Tribunal for the wages they should have received. It is worth noting that there have been no reported cases where the Tribunal has found it was reasonable for the employer to refuse the time off requested by the employee.

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. 

Your duty to consider what alternative employment is available continues throughout the redundancy exercise, including during any period when someone is working out their notice. In order to avoid paying a statutory redundancy payment any offer must be suitable, made before the notice period or employment ends, and involve starting employment in the new role within four weeks.
 
From a wider unfair dismissal perspective, if alternative employment arises after the employee has been made redundant, and within the three-month time limit for the employee to bring a tribunal claim, you should consider offering the role to them as a matter of fairness.
 
In addition, you may have extra duties, as regards finding alternative employment, for those who are disabled as part of the general duty to make reasonable adjustments to accommodate the disabled person's needs. The case of Tarbuck v Sainsburys, however, confirmed that there is no obligation to create a post specifically for a disabled person in a redundancy situation.
 
Those on maternity, shared parental and adoption leave have special rights and, if selected for redundancy and there is a suitable vacancy, the employee is entitled to be offered that role. 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, this right to 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
Acas has published good practice guidance on handling redundancies when you have employees who are pregnant or on maternity leave.
 
The protection for those on family-friendly leave will be enhanced in the future, and it will apply from the date the employee informs the employer that she is pregnant, whether verbally or in writing, and ends six months after the employee has returned to work.
 
A failure to offer alternative employment is likely to make the dismissal unfair. 

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 section 138 of the Employment Rights Act 1996 an employee is entitled to four calendar weeks by way of a 'trial period' in their new job. You can extend this to a longer period in writing, especially if training is required for the alternative role. If extending the trial period, this must be agreed in writing prior to the end of the trial period. 
 
If either party does not consider the employment to be 'suitable' during the trial then the situation will revert to a redundancy and the obligation to make a statutory redundancy payment will apply.

Once the employee has worked beyond the four-week trial or the mutually agreed extension it is deemed that they have accepted the new employment and the right to claim a redundancy payment is lost.

To qualify for a statutory redundancy payment (SRP), employees must have at least two year’s continuous employment.  They must not:

  • Be a merchant seaman, former registered dock worker engaged in dock work (covered by other arrangements) or a share fisherman
  • Be a crown servant, member of the armed forces or police
  • Be apprentices who are not employed at the end of their training
  • Be a domestic servant who is a member of their employer’s immediate family
  • Ordinarily work outside the United Kingdom under their contracts of employment.

The payments are calculated as follows:

  • for each complete year of service when aged 18-21 = ½ week’s pay
  • for each complete year of service when aged 22-40 = 1 week’s pay
  • for each complete year of service when aged 41 and over = 1 ½ week’s pay

A "redundancy ready reckoner" is available here for the above calculation. 

Only the last 20 years of service are included.

A week's pay 

A week’s redundancy pay is calculated at the date the employee is given notice and is subject to a statutory maximum limit (see our . Statutory rates for the current rates). If the employee’s weekly pay is under the statutory maximum limit, then redundancy pay is calculated on their gross weekly pay. If their pay varies, then calculate the average from the twelve weeks prior to the date that notice was given.  

See our How to guide for further information on this. 

Occupational pension schemes

In addition, an employer who intends to dismiss an employee to whom a payment is due under an occupational pension scheme not more than 90 weeks after the dismissal may offset part of the pension payment against the redundancy payment.

An employer may pay employees more than the statutory maximum redundancy payment.  The current maximum amount which can be paid tax free is £30,000, provided it is genuinely made solely on account of redundancy. The safest way to do this is to either increase the multiplier of weeks’ pay per year of service or to base the calculation on a higher basic weekly wage.  Please contact the Payroll Advice Service if you are considering doing this.
 
Many employers have a payment scheme which enhances the statutory scheme, usually using a contractually agreed formula. You need to ensure that it is compliant with the Equality Act 2010. It permits you to use the statutory redundancy payment ('SRP') as a base calculation and apply a multiplier to that, to apply a multiplier to the SRP multiplier, or to increase a week's pay to actual salary and/or to aggregate these measures. It does not enable you to fix enhanced redundancy pay on a particular length of service or to set a cap on the payment, for example, setting a maximum payment of one year's salary.
 
Some employers make 'ex gratia' payments to staff upon redundancy. There is a risk of ad hoc schemes becoming contractual as a matter of custom and practice over time. In the Albion Automotive case the Tribunal stated that this would depend on the following factors:
  • whether a policy was drawn to the attention of staff
  • whether it was followed without exception for a substantial period
  • whether payments were automatically and consistently applied
  • whether the employees had a reasonable expectation that an enhanced payment would be made
In Keeley v Fosroc International Ltd the staff handbook contained enhanced redundancy pay details which led to a presumption that it was contractual and failure to honour it would result in breach of contract claim.
 
In Park Cakes Ltd v Shumba the court looked not at what the employer intended but at what its words and conduct would reasonably communicate to the workforce. Thus where payments are described as 'ex gratia' and 'discretionary' they are less apt to become contractual than when they are described as part of a 'policy' or an 'entitlement'. Take care with the language you use when describing payments.
 
Public sector exit payments
 
The below only applies to operators within the public sector. 
 
From 4 November 2020, public sector exit payments must not exceed £95,000. This includes any enhanced redundancy payment that is provided in addition to statutory redundancy pay. As outlined above, statutory redundancy pay should not be reduced by this cap. 
Statutory and enhanced redundancy payments are exempt from tax and national insurance up to £30,000. However, care needs to be taken, if someone is retiring, to ensure that HMRC do not deem the payments to be unapproved retirement benefits, which are taxable.
 
Outplacement can be provided by an employer tax free if the employee receiving the counselling has more than two years' service and it is provided to enable the employee to adjust to the cessation of the employment or to find gainful employment (including self-employment). The service should also be part of arrangements generally available to employees or former employees of the employer, or to a particular class or classes of them.
 
Normally, an employee will be taxed on any other payments they receive in connection with their employment being brought to an end, including retention bonuses and their holiday and notice pay. 

In order to safely bring the contract of employment to an end you must issue the employee with proper statutory or contractual notice. If you have the contractual right to make a payment in lieu of notice then you may decide not to require the employee to work out their notice period. You should express clearly in a letter that a payment in lieu of notice is being made. If you need to incentivise employees to stay until the end of their notice period you may have to consider offering a loyalty bonus.

Any letter issuing notice to terminate an employee's employment should also refer to their right of appeal to a more senior manager who has not already been involved in the process. A template can be found here for single post redundancies, and here for redundancies involving pooling. 
 
Notice 

Following the end of the consultation period, the employees selected for redundancy must be given notice to terminate their employment. This notice payment is in addition to a statutory redundancy payment. There are statutory minimum notice periods which you must give your employees unless they have contractual rights to longer notice.  Minimum statutory notice periods are as follows: 

  • Up to 1 month’s service – no notice
  • 1 month to 2 years’ service - 1 week
  • 2 years’ and above - 1 weeks’ notice for each completed year of service up to a maximum of 12 weeks.

If you want to pay notice in lieu, you may do so. However, if the employee’s contract does not specifically allow this, you would be in breach of contract.  The payment where there is no contractual PILON clause, therefore, would usually need to include any other benefits that would have accrued during the notice period, as well as the notice pay itself.

If the employee cuts the notice short  

If the employee has been required to work their notice period and they refuse to or leave before the expiry of the notice period to take employment with another organisation then, under certain circumstances (provided a counter notice is issued to the employee) the entitlement to a full statutory redundancy payment is jeopardised and could be reduced to an amount which a tribunal feels is just and equitable. Regardless, no further notice pay will be due.

Holiday pay

In addition to notice and redundancy pay, employees are entitled to any outstanding holiday pay up to the termination date. If the employee receives a payment in lieu of notice where there is an express PILON clause in the contract, whether this includes holidays that would have accrued had they worked their notice period, will depend upon what the contract states. Holiday pay is taxable.

Employee benefits

All contractual entitlements continue until the end of the notice period and may, at your discretion, extend until the insurance policy is renewed, for example:

  • Permanent Health Insurance
  • Private Medical Insurance
  • Company Cars
  • Employee Assistance Programme (EAP)

In the event of paying in lieu of notice, where there is no express clause in the contract, it is recommended to compensate the redundant employee for the loss of any benefit they may have received had they been required to work their notice period. 

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.

We have recently undergone a redundancy programme. We have been able to find suitable alternative employment for one of the employees to whom we had given notice of redundancy. However, they say that they don't want to do the job and would prefer to be made redundant. Their argument is that the job is working in a department where they have never worked, and where they do not want to work. Can they refuse?

If an employee who is under notice of redundancy is offered suitable alternative work, they are allowed a four week trial period in the role. If, at the end of this period of time, either the employer or the employee considers that the role is not suitable, they are entitled to return to being under notice of redundancy. If they unreasonably refuse suitable alternative work then they have resigned, and would not be entitled to a redundancy payment.
 
This all means that there is a need to define 'suitable', and this is where a difficulty can arise. In Readman v Devon Primary Care Trust [2013] a community nurse was under notice of redundancy when a role became available in a hospital. She refused the role, arguing that she had worked in the community since 1985 and did not want to return to working in a hospital. The employer said that this was an unreasonable refusal and hence did not pay her a redundancy payment.
 
The Employment Appeal Tribunal ruled that an employee can refuse alternative employment, if the refusal is reasonable. It concluded that Readman's refusal was reasonable. However, the Court of Appeal ruled that the EAT cannot substitute its own view for that of the employer. Hence, the case has been referred back to the employment tribunal to determine whether Readman's refusal was reasonable.
 
What this case tells us is that an employee can refuse alternative work. However, the focus must be on the reason for the refusal and whether this is reasonable. You need to talk to the employee in question and think carefully about the reasons that they are giving for refusing the job. Consider whether they are being reasonable. If not, you should tell them that they must complete the trial period, and that they risk forfeiting their redundancy payment.

We need to cut costs in our sales department. In this department we have administrators, sales representatives and account managers. Our plan is to reduce the staff of 18 to 10. The new department will be smaller, and all staff will need to do a bit of everything, rather than specialise. On that basis, can we just put everyone in a redundancy selection pool, keep those who score highest and retrain them if necessary?

In Murray and another v Foyle Meats Ltd [1999] the House of Lords clearly set out what amounts to redundancy. There has to be a reduction in the requirement for work of a particular kind within the business, and dismissals must occur because of that reduction.
 
In your case there is clearly a reduction in the requirement for work - what you are suggesting is a form of 'bumping'. This occurred in Contract Bottling Ltd v Cave [2013].
 
The employees all worked in the accounts department, all of them were put in a pool (this included jobs such as accountants, warehouse managers and administrators) and those that scored lowest were dismissed. Employees who remained were then retrained if needed, so that they could do the remaining jobs. What you are proposing is similar to this.
 
It would seem, therefore, that there is no problem with your approach. However, you must take care with your selection criteria ensuring that it does not favour people with particular skills. If you are going to assess everyone equally the selection criteria must allow you to do this - and that will require some careful thought.

It looks very likely that my organisation will become insolvent. Inevitably, this will mean that all of our employees will be made redundant. There are over 100 employees. Will we need to consult for the full 45 days? We probably cannot trade for that long.

The requirement is to act reasonably. Clearly, you cannot continue to trade once the organisation is insolvent, because this will mean that the directors are personally liable for any obligations, as well as incurring potential criminal liabilities for trading whilst insolvent.
 
In AEI Cables v GMB [2013] an organisation facing insolvency made over 100 employees redundant. This happened when the consultation period was 90 days (it reduced to 45 days in April 2013) and the employees successfully argued that there had been a breach of the consultation requirements (there had been no consultation) and the employment tribunal awarded 90 day protective awards. This was reduced to 60 days by the EAT, given that the organisation would not have been able to trade for a further 90 days. However, it was not seen to be reasonable to have carried out no consultation at all.
 
It seems that it might be prudent to enter into consultation now, unless there are sound commercial reasons for not divulging the precarious state of the organisation. It is not likely to be reasonable to engage in no consultation, but if it is really not possible to consult for the 45 days it could be acceptable as long as all reasonable attempts at consultation have been made.

We are currently managing a redundancy situation. We have identified a selection pool for one of the redundant positions. This is a pool of four marketing officers. One of the marketing officers is currently on maternity leave - she has now been away for 10 months. In our selection matrix we have a number of criteria that relate to performance in the job (as well as other criteria such as attendance). Our company policy has always been to focus on the last nine months when assessing performance. For the marketing officer that is on maternity leave can we focus on her last nine months at work?

The requirement is to ensure that you treat the marketing officer who is on maternity leave in the same way as the others in the pool. You are not required to treat them more favourably.
 
You need to consider if you are able to assess her adequately against the performance criteria when you think about the last nine months that she worked for you. Did she have the same opportunity to demonstrate her ability against those criteria as the opportunities that the others in the pool have had over the past nine months?
 
In Riežniece v Zemkopibas ministrija and another [2013] the employer made redundancy selections using recent appraisal information. One employee was on maternity leave and she was assessed using historical appraisal information that did not include all of the same criteria as the others. She was selected for redundancy. This was found to be unfair, because the selection method must be the same for all employees.
 
If the selection criteria that you are using is the same for all those in the pool, and all of those in the pool have had an equal opportunity to demonstrate their abilities against the criteria, then the approach to selection will be acceptable. You must be sure, however, that you are able to assess the employee on maternity leave fairly and appropriately.

We understand that we are required to collectively consult with employees if there are to be more than 20 redundancies in a 90-day period. We have two sites but each site has fewer than 20 redundancies. At one we are going to have 15 redundancies and at the other 10 redundancies. Is collective consultation required?

Yes, you will be required to have a period of collective consultation. In the case of Usdaw v W W Realisation 1 Ltd [2013] this question was addressed. The case related to the collapse of Woolworths. There were inadequate attempts at consultation, and a protective award was made for each employee who was made redundant. It was argued that this should not apply to those working in stores with fewer than 20 employees, because collective consultation was not required in those situations. This argument was unsuccessful.
 
The EAT has ruled that the wording of the Trade Union and Labour Relations (Consolidation) Act 1992 does not meet the requirements of the European Union collective redundancies directive when it refers to redundancies at 'one' establishment. The EAT held that 'establishment' has to be interpreted more broadly, and that if an organisation has redundancies taking place at a number of locations at the same time, this should be interpreted as being at one establishment.
 
So, in your case the courts would reason that you have 25 redundancies during a 90-day period. There is a requirement, therefore, to enter into collective consultation with representatives of employees that are affected at both sites.

We are facing a downturn in work and need to reduce headcount. We have decided to start by asking for volunteers for redundancy, hoping to avoid any compulsory redundancies. We have decided to exclude part-time employees and those on career breaks from applying for voluntary redundancy. Is that acceptable?

No. First, as a result of the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, part-time workers must not be treated less favourably than full-time workers. Denying access to voluntary redundancy is less favourable treatment, and will be unfair.
 
The difficulty of excluding those on career breaks is that they are most likely to be women (presuming that most career breaks are taken to raise a family) so this could be indirect sex discrimination. In HM Land Registry v McGlue [2013] an employee was refused voluntary severance when the employer unilaterally decided to exclude all those on a career break from the scheme, without consulting employees or their representatives. She was successful in her claim of indirect sex discrimination. The voluntary redundancy scheme should be open to all employees to avoid any allegations of discrimination or unfair treatment.
We have an employee who is very difficult! They complain about everything, have raised numerous grievances and are also a poor performer. They have received formal disciplinary warnings about their attitude and their performance, and always improves for a few months until the warning expires and then their performance deteriorates again.
 
A redundancy situation has now arisen in their team - two jobs need to go. The selection has been carried out, using an agreed selection matrix. They have been selected for redundancy. At the initial consultation meeting with them, the employee alleged we are actually dismissing them for conduct, and that redundancy is an excuse. What should we do?
You need to be certain there is a redundancy situation. As you have said that two jobs are going, it does not seem that a situation has been created to dismiss this employee; but look back at the definitions of redundancy in the Employment Rights Act 1996. Is the situation one where the business is ceasing to operate, or is it ceasing to operate where the individual is employed, or is there a downturn in demand for the work the employee does?
 
If you are certain there is a genuine redundancy situation, the next step is to look again at the selection matrix. If it is possible, has it been completed by two managers independently? Is the selection reasonable and fair?
 
In Fish v Glen Golf Club [2012] [BAILII] an employee argued that he had been dismissed for conduct, when selected for redundancy. However, the employment tribunal found that although there was some evidence to suggest conduct and capability issues, there was a real redundancy situation. If your employee has been a poor performer, it does not seem illogical that they are selected using a fair redundancy selection matrix.

We have recently completed a redundancy selection process. The trade union is arguing that we did not consult adequately because we did not provide them with all the information they required. Specifically, they are saying that we did not provide information about agency workers. We did not realise this information was a requirement, and so did not provide it when requested. The union says it is going to seek a protective award for all those affected by the redundancy. Will this be granted when we made a genuine error?

When consulting in a redundancy situation there is a list of information that must be provided to the employee representatives at the start of the consultation. Employers must provide the:
  • reason for the proposed redundancies
  • type and number of jobs that are proposed to be made redundant
  • total number of employees at the workplace where the redundancies are to take place
  • method used to calculate redundancy pay, if the employer plans to pay more than the statutory minimum
  • number of agency workers working under the supervision and direction of the employer
  • type of work the agency workers do and which parts of the organisation the agency workers are engaged in.
The last two points were added as a result of the Agency Worker Regulations 2010 - it looks as if these are the three points you did not address.
 
Unfortunately, the courts could conclude that you have not consulted adequately. In Unison v London Borough of Barnet and Another [2012] the trade union asked for this information and it was not provided. The employment tribunal granted a protective award.
 
It is essential to ensure that all information that is legally required is given. It is also essential to respond to any requests for information unless they are clearly unreasonable.

We have a well-established assessment centre that we use for the recruitment of sales representatives. We need to reduce the headcount of the sales force by 10 per cent. Can we use the recruitment assessment centre to select employees for redundancy?

The law does not set out a way that must be used for redundancy selection, but case law shows that it must be as objective as possible. It must also be fair and reasonable. Using an assessment centre process is likely to be reasonably objective, but using just that might not be fair.
 
In Mental Health Care (UK) Ltd v Biluan and another [2012] the organisation put together an elaborate redundancy selection process that was partly based on the approach they used to recruitment selection. However, they had no regard to the performance of the individuals in their jobs and went ahead with the redundancies even though there were some surprising results. The EAT found they had lost touch with common sense, and that the approach was not fair.
 
So, as well as using objective selection criteria, it is important to think about what would be fair, and performance in the job is something that really should be included. It is also important to remember that a recruitment assessment centre is used when the employer knows nothing about the abilities of the individuals. Redundancy selection is not the same situation. So, all tasks within the assessment centre should be questioned - will they really tell you anything that you do not already know about the performance of your employees in their jobs?

Is it possible to have a redundancy selection pool of just one person? We are currently in the collective consultation process relating to a redundancy of 57 jobs. We have been identifying the jobs that are to be made redundant and one is the job of Maintenance Manager. We have smaller premises than we used to have, and there is not enough maintenance work for a full time person to do. Hence, we have decided to make this job redundant and just seek support from an appropriate tradesperson as and when it is required. Our Maintenance Manager is the only person in the maintenance department. No-one else is involved in maintenance at all. By deciding that the job is redundant have we also selected the person?

Yes! As you have correctly identified, a job is made redundant in the first instance. If a number of people do that job then there is the requirement to select the employees to be dismissed due to redundancy from those people. However, if there is just one person doing the job there is no valid selection that can be carried out.
 
In Halpin v Sandpiper Books [2012] the EAT supported the findings of the Tribunal that a selection pool of one was reasonable. In reaching their decision they gave the following guidance:
  • If appropriate, it is acceptable to have a selection pool of one.
  • Management are entitled to determine a selection pool.
  • If the decision about the selection pool is a reasonable management decision, then it would be a rare situation when the Employment Tribunal could argue with it.
I work for an organisation that operates on two sites, which are ten miles apart. One site manufactures large metal parts and the other site manufactures smaller metal parts. We have a quality engineer at each site. Although their work differs in some ways, they do cover for each other during holidays and sickness absence, and they do carry out quality audits at each other's sites.
 
We have announced a redundancy of thirty jobs at the site that manufactures large metal parts. Included in the list of jobs to be made redundant is the quality engineer. I had intended to just make the quality engineer redundant, without any selection as it is a unique job on the site. However, the quality engineer has argued that they should be in a selection pool with the quality engineer on the other site. Are they correct?
In considering whether a selection pool has been fairly identified an Employment Tribunal would want to see that careful consideration has been given to the selection pool. As the quality engineer has queried the pool it is essential that you give serious consideration to the point that they have made.
 
In the Court of Appeal judgment in Thomas and Betts Manufacturing Ltd v Harding [1980] it was identified that the following factors need to be considered:
  • Whether other groups of employees are doing similar work to the group from which the selections are being made
  • Whether employee's jobs are interchangeable
  • Whether the inclusion of the employee in the selection pool is consistent with his job role
  • Whether the selection pool has been agreed with the trade union or employee representatives
In this case it does seem that the two quality engineers are doing similar work because they cover for each other during holiday and sickness absence. It also seems that their jobs are interchangeable to some degree. It could further be argued that including both quality engineers in the selection pool is consistent with the job roles, due to the way in which they cover for each other and carry out quality audits on each other's sites.
 
Clearly a key reason why the two quality engineers have not been included in the pool is that the redundancies are taking place at just one site, and they work at separate sites. However, in the case of Highland Fish Farmers Ltd v Thorburn and another [1994] the EAT found that employees working in fish farms scattered throughout the North of Scotland should have been in the same selection pool, even though two of the sites were a 40 minute travelling distance apart.
 
It is recommended that you try to agree the selection pool with the trade union or employee representatives as part of the consultation process. However, given the law outlined here it would seem appropriate to put both quality engineers into one selection pool, and to carry out a selection process to determine which engineer should be made redundant.
My organisation has recently announced a redundancy of 45 jobs. I am currently in the process of consulting with the trade union representatives about the redundancy, and today we have been discussing the selection criteria that will be used to identify individuals who will be made redundant.
 
We have agreed on every criterion apart from absence. The organisation wants to include sickness absence as a selection criterion with a points-based assessment being used on the selection matrix that gives maximum points for full attendance in the last 12 months, ranging to zero points for 21 or more days' sickness absence in the same period.
 
However, the trade union representatives will not accept this because they say that it is disability discrimination. I am really surprised by their reaction and am not sure what to do. It does seem that sickness absence is a relevant criterion to include, and as it can be objectively assessed I thought that the trade union would want it included.
You are certainly correct that using objective criteria is a good aim. Indeed, the Employment Tribunal would look to see that any criteria used have been assessed as objectively as possible. However, you must take care when using sickness absence as a selection criterion.
 
It is important to be reasonable in the period over which the absence is assessed. In the case of Fleming v Leyland Vehicles Ltd [1984] the organisation was criticised by an employment tribunal for limiting the assessment period to just six months, and suggested that eighteen months would have been more reasonable as a shorter period was more advantageous to a shorter-serving employee.
 
It is not necessarily unreasonable to consider the health of an employee in the selection process, but it would be disability discrimination if the employee's poor health amounted to a disability. In Clare v County Durham Health Authority [1997] an employee was selected for redundancy following a long absence due to a disability. This was found to be discriminatory because the employee had previously had an excellent attendance record prior to the disability occurring. In accordance with the Equality Act 2010, reasonable adjustments should have been made.
 
So, it is possible to include sickness absence as a criterion for selection. However, you must have in place some reasonable adjustments so that those who are disabled do not suffer any detriment. The simplest approach would be to discount any absence that related to a disability when carrying out the assessment.
We currently have a sales manager and a service manager. Due to a reduction in work, we have decided to make both jobs redundant and create a new post of sales and service manager. The manager will need to have sales experience, and also technical experience (to support the service part of the role).
 
Our current sales manager is an excellent sales person, but does not have the required technical knowledge. Our current service manager has excellent technical knowledge, but could not sell anything! So, we have decided that both will have to go and we will recruit a new person. Do we have to allow the two managers to apply for the job?
The first question is whether you can demonstrate that both of the current jobs have gone. To do this, you will need to be able to show that the new job is significantly different to both of the current jobs.
 
If this is the case, then you will need to enter into a period of individual consultation with each of the managers concerned (even if this is part of a larger redundancy situation and collective consultation is therefore required, you will still need to engage in individual consultation). As part of this consultation, you will have to consider whether there is any suitable alternative employment available. If either manager considers the new job to be a suitable alternative, it would be sensible to allow them to have an interview. However, you could certainly emphasise the difference between their current role and the new role.
 
If it is thought that one of the managers might be able to do the job, a trial period of four weeks is allowed. If, during this period, either of you concludes that the job is not a suitable alternative, the employee can leave the job and return to being on notice of redundancy.

We have an employee who works on a part-time basis. It has now been identified that the job requires more time, and hence it needs to be carried out on a full-time basis. The employee does not want to work longer hours. Can we make them redundant and then advertise the new role?

This is a tricky situation. Redundancy occurs when there is a reduction in need for work, or a business is closing. However, in this situation, there is clearly an increase in the need for work.
 
The first step is to talk to the employee. Even though the employee does not want to work on a full time basis, is there other part-time work in the organisation that they might be able to do? Also, why do they want to work part-time? Do they want to work part-time because they are not well? Could they, therefore, be disabled under the Equality Act 2010? If so, does this mean that allowing them to work part-time could be a reasonable adjustment? You need to explore these issues before deciding what to do.
 
If the employee just prefers to work part-time, would it be beneficial to the organisation to employ another part-time employee and have the two of them working in a job share arrangement? Clearly they must have a lot of knowledge of the organisation, do you want to lose that?
 
It would be difficult to justify a redundancy in this situation, if you have not explored all reasonable alternatives.

We have experienced a downturn in business. We are hopeful that this is not permanent, and hence we do not want to make employees that have valuable knowledge and experience redundant. So, we have decided that we will ask all employees to reduce their hours. We know that this is a variation of contract, and hence we know that we need to seek agreement. However, what we want to know is if employees can insist that they are made redundant instead of taking a reduction of hours?

To claim a redundancy payment the employees would have to have their employment terminated by the organisation. If you consult with employees about the proposed reduction in hours and this is not successful, then one option you could consider is dismissing the employees that will not agree. However, if you did this and the reason for the dismissal was a reduction in work it is possible that they could claim a redundancy payment. This is what happened in Packman t/a Packman Lucas Associates v Fauchan [2012]. In this case one employee was asked to reduce her hours, but refused and was subsequently dismissed. She successfully claimed that she was entitled to a redundancy payment because the reason for her dismissal was that the requirement for her work had reduced (which is one of the definitions of redundancy).
 
An employee cannot insist that you make them redundant. However, if you dismissed an employee due to a reduction of work then it is very likely that this would be seen to be a redundancy situation.
Over the past few months, we have been going through a redundancy programme. Consultation is now completed, employees have been selected, and notices of redundancy have been given out.
 
One particular employee was selected for redundancy and due to their length of service was given eleven weeks' notice. They are currently in the second week of that notice period.
 
Since giving them notice of redundancy, it has become apparent that there were some irregularities in the accounts department where they worked. An investigation has taken place, and it is very clear that they have been taking money from the company. In total, they have taken £1,567. This is gross misconduct, and we would normally go through the disciplinary process and then summarily dismiss. We have put the allegations to the employee and they have admitted them. However, they say that they have already been given notice and hence we have to pay them for the full eleven weeks. Is this correct?
This is a difficult and unusual situation. It is similar to what happened in Cavenagh v William Evans Ltd [2012]. Cavenagh was Managing Director of the company. It was decided that his role was redundant, and the employer agreed to pay him six months' pay in lieu of notice in line with a clause in his contract. However, before the payment was made it was discovered that Cavenagh had paid £10,000 of the company's money into his pension knowing that he was not entitled to do this. The company found that this was gross misconduct. If this had been discovered prior to the redundancy then Cavenagh would have been dismissed. Hence, the company argued that they were no longer required to make the payment in lieu of notice.
 
The Court of Appeal found that Cavenagh was entitled to the pay in lieu of notice, because his employment had been terminated due to redundancy. There was no provision in the contract which allowed for the payment in lieu of notice to be withheld if it was subsequently found that he had committed gross misconduct. Also, there was no general principle of law that meant that Cavenagh had no right to pursue the pay in lieu of notice as a debt owed to him by the company.
 
Given this case, it seems that you are required to pay the notice, unless the situation is addressed in your disciplinary policy or contracts of employment.

We have recently announced a redundancy and five employees have indicated that they would like to volunteer for redundancy. We are prepared to accept them as volunteers, and hence we have asked them to write to us formally and resign from the organisation. However, one of the employees has said that they are not prepared to do that, because they are concerned that this would mean that they are not entitled to a redundancy payment. Should they resign?

No. If there is a genuine redundancy situation then an employee who volunteers for redundancy is still considered to have been dismissed on the grounds of redundancy. It is not a resignation, and it is not a termination by 'mutual consent'.
 
It is important to ensure that a distinction is drawn between voluntary redundancy and accepting early retirement. In Birch and another v University of Liverpool [1985] the University offered an early retirement scheme, but also said that there would need to be redundancies if there were insufficient people prepared to accept early retirement. The Court of Appeal found that there was no dismissal of those who opted for early retirement - their contracts of employment had been terminated by mutual consent.

I used to work for an organisation which started to struggle financially and most of the employees, including me, were made redundant. I received a letter explaining that I would be paid a statutory redundancy payment and notice pay of six weeks (I had worked for the organisation for six years), but before I received the money the company was dissolved. I then received a letter saying that I now had to claim the money from the state, and was sent a form to complete. I asked an ex-colleague of mine from our old HR department who was also made redundant at the same time, and they told me that I can only claim the statutory redundancy payment and not the notice pay. Why?!

If the organisation that you work for closes then it is possible to claim money from the Government. This applies if the organisation is a company or limited liability partnership and goes into administration, liquidation, receivership or a voluntary arrangement with creditors. If the employer is an individual it applies if they file for bankruptcy or enter a voluntary arrangement with creditors.
 
Under these circumstances an employee is entitled to claim:
  • their statutory redundancy payment
  • wages - up to a maximum of eight weeks
  • holiday pay - up to a maximum of six weeks
  • compensatory notice pay - one week after one calendar month's service rising to one week per year of service up to a maximum of 12 weeks (the statutory maximum for a week’s pay applies).
So on the face of it, it looks like you could be eligible to claim the notice pay after all, but it is important to be clear about what exactly has happened to your former employer as insolvency needs to meet specific criteria. In the case of The Secretary of State for Business, Innovation and Skills v (1) Miss CM Coward (2) Local Taverns Ltd [2011] the claimant was made redundant, and soon after the company became insolvent. The claimant asked for a statutory redundancy payment and notice pay from the Government. However, the Secretary of State argued that only the redundancy payment should be paid, because the definitions relating to insolvency had not been met in this situation. The EAT supported this.
 
Your eligibility will depend on the exact situation of the organisation. If an administrator has been appointed then they will usually be able to advise former employees of their situation, so we recommend that you investigate further to find out if your ex-employer has one and go from there.
I work in a University as the HR manager. Like many universities, we have been carrying out a redundancy programme. Previously, our university was divided into four separate schools and each school had its own support function. As part of the restructuring, we have merged two of the schools, and hence we have merged two of the support functions.
 
In the Admissions team there was a team leader and three admissions administrators in each school. In the merged school we have one team leader and four admissions administrators. Three of the administrators volunteered for redundancy. As neither of the team leaders volunteered we carried out a selection procedure and selected one for redundancy. However, we offered this team leader the role of admissions administrator which they accepted. As part of the deal we agreed to preserve their salary, and also agreed that they would deputise for the team leader if they were absent.
 
As this was an offer of alternative employment we agreed that the usual four-week trial period would apply. However, after just three days the employee has told us that they do not want to continue in the role of administrator and that they want their redundancy money. As we agreed to preserve their salary, the work was work that they can do, and they will deputise for the team leader, we have informed them that their refusal is unreasonable and that they will be treated as having resigned and they will no longer be entitled to a redundancy payment. Is that acceptable?
In accordance with the Employment Rights Act 1996 , the Employment Tribunal would consider whether the job that was offered is suitable and, if it is, whether refusal of the job was reasonable. In determining this, the Employment Tribunal would have regard to the specific facts of the case.
 
Suitability is usually assessed with regard to factors such as job content, status, terms and conditions etc. In this case it seems that there is no argument that the employee has the skills to do the job, and their salary is unaffected by the change. However, there is an impact on status. It could be argued that the "demotion" to administrator means that the job is not suitable.
 
There have been various cases where an employee has been given a job that is, in reality, a demotion with a preserved salary. It is usual for the Employment Tribunal to conclude that the drop in status means that the alternative employment is not suitable. In the case of Chesson v Popular Hire Services Ltd [2001] one branch was closed and the manager of the branch was offered a role working at another branch (with no reduction in salary), but in a subordinate role to the manager at that branch. This was not seen to be a suitable alternative. This case is very similar to your situation, with the team leader concerned being required to work as a subordinate to the other team leader.
 
Even if it were concluded that the alternative offer of employment was suitable it could still be reasonable for the employee to refuse the role. In the case of Cambridge and District Co-operative Society Ltd v Ruse [1993] , Ruse was the manager of a butcher's shop that closed down, and he was offered the position of butchery department manager in a supermarket. Ruse refused the role because he would have been under the control of the store manager and there was a perceived loss of status because he would no longer be responsible for banking money and would not have his own key to the store. The EAT found that refusing the job because of the perception of the loss of status was reasonable.
 
Given this, it would seem that the role of admissions administrator is not a suitable alternative due to the loss of status. Even if you were able to argue that it is a suitable alternative, it is quite possible that the employee could argue that it was reasonable to reject the offer. On that basis, it would seem appropriate to reinstate the notice of redundancy and to pay the appropriate redundancy payment on the termination of their employment.
It has been decided by the senior management team that one of our shops (we have a chain of 15 shops) is going to close. This is because it is unprofitable. The shop in question is very large, and staffed mainly by part-time staff. In total there are 88 staff at the shop.
 
Although the decision has now been made that the shop will close, it will continue to trade for another six months. This is for a variety of reasons, including the intention to keep it open for the Christmas trading period.
 
As there will be 88 staff being made redundant we know that we need to consult for at least 30 days. However, we are concerned that we are required to consult when decisions are still at a 'formative stage'. Can we delay consultation until nearer the date when we plan to close the shop?
In Akavan Erityisalojen Keskusliitto Aek RY and Others v Fujitsu Siemens Computers Oy [2009] the Supreme Court of Justice of Finland referred a question to the Court of Justice of the European Union seeking advice on the application of the EC Collective Redundancies Directive.
 
The Directive states that 'where an employer is contemplating collective redundancies, he shall begin consultations with the workers' representatives in good time with a view to reaching an agreement' (Art 2.1).
 
The ECJ ruled:
  • Employers must give notice to the trade union as soon as a strategic decision is made that causes the local employer or subsidiary to consider mass redundancies.
  • The duty to consult does not depend on whether the subsidiary has all the information that it must submit to unions under the requirements of the Directive. The employer can supply information as it becomes available.
  • The subsidiary must complete the consultation before any terminations take place regardless of whether the terminations come as the result of a direct instruction from the parent company.
On the basis of this ruling, it seems that you cannot delay the start of consultation. You have already made a strategic decision which results in you considering mass redundancies. Indeed, if you do not consult at this stage one could ask what point there will be in any consultation. If you wait until all decisions have been made, then the consultation will be worthless.

We are currently going through redundancy consultation with an employee, and they have raised the possibility of us providing outplacement support. Is this something we have to provide? 

There is no legal obligation on you to provide assistance to employees who you are making redundant to help them find another job. But this kind of support can really help employees at a vulnerable time in their lives when they face unemployment. It can also reinforce your reputation as an employer and enhance the psychological contract you have with your wider set of employees if you can provide emotional and practical assistance to those who need it.

I would like to offer outplacement support to a group of employees who have been made redundant, but I have very little budget for this. Is this something I have to pay? 

There is no obligation on you to provide outplacement support, and no obligation on you to pay for it if you arrange access to this practical support measure for employees who are being made redundant. However, it is standard practice for the employer who is making the redundancies, and chooses to arrange outplacement support, to pay for an external provider to come in and give the practical support and training.

Alternatively, it can be provided in-house where there is sufficient resource with the appropriate skills to deliver the support, meaning that there are no direct additional costs attached.

In some cases, employees will pay for the support themselves if, for example, the business is going into liquidation and there are no funds available. If this is the case, it should be made clear to employees that they will need to pay for it themselves.

I would like to do something to help our employees who have been made redundant. What could I offer them? 

Outplacement support is support offered to employees who are in their notice period because they are being made redundant. It can also be helpful for employees who are leaving an organisation because of a restructure. The purpose of the support is to give practical advice to help the employees find new employment when the job they are in finishes which is generally for a reason not connected with them personally. The support can provide help with creating a good CV; interview preparation; identifying the best way to search for new jobs and also incorporates assistance with softer skills like building confidence and resilience.

I have been offered the opportunity to learn how to provide outplacement support, but we do not anticipate making anyone in the business redundant. Are there any other uses for outplacement support?

Yes, many. Outplacement support can be useful in different circumstances which result in the employee leaving the organisation. This includes redundancy, but also retirement and where a settlement agreement has been used.

An employee has approached us about offering outplacement support to them, as they have just been made redundant. Does outplacement support find a new job for my redundant employees?

No. Outplacement support is designed to give your employees skills in how to find a new job, rather than actually finding them a new job or training them in a new industry skill. It will help them review their CV, for example, or prepare them for interviews which can be very useful if an employee has been with you for a long time and so hasn't had an interview for many years. It can also explore how they might use their social media profile to help them secure new employment. Again, this can be useful for employees who do not ordinarily use social media, or have no experience in how to utilise it for professional means.