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MAKING FEWER THAN 20 EMPLOYEES REDUNDANT:
In April 2009, the law with regard to disciplining and dismissals changed. There are now no statutory 'steps' to follow. However, best practice dictates that essentially the same process applies, going back to the pre statutory days where the obligation on the parties was simply to act reasonably.
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PREPARATORY STEPS - Redundancy Situations
- What are your reasons for redundancy? The reason must be one of four available “genuine” reasons for redunancy
- You then need to Investigate the reasons for redundancy and consider the importance of documented evidence.
- Identify the pool and apply selection criteria, satisfying the test of objectivity and applying fairly.
- Consider individual circumstances and how legal principles apply to certain individuals, for example with regard to (amongst other things) disability, age or maternity reasons.
- Although there is no statutory requirement for collective consultation if fewer than 20 employees are likely to be affected by the redundancies, the general principles about the timing of consultation and topics for discussion should still be observed.
- You need to consider when to start procedure, when the first dismissals take effect and when to make any public announcement of the redundancies and give notices of termination.
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THE PROCEDURE IN PRACTICE
- 1. Written statements are to be given to all employees in the pool (if there is one)
- Employees are then invited to a meeting and informed they can bring a colleague, or rearrange the time of the meeting if they wish.
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THE MEETING
- After a certain time (the length of which will be dependent on several factors), you must then meet with the employee.
- What should be discussed at this meeting and how you should handle it are dependent on individual circumstances.
- After the meeting, inform the employee of the outcome of the redundancy.
- The employee may appeal against your decision.
- You are obliged to consider suitable alternative positions for the employee. This is an area which needs careful consideration not only on the positions but the type of information that should be considered and which should be given to the employee.
- Employees who unreasonably refuse an offer of suitable alternative employment may lose any entitlement to redundancy pay.
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APPEALS
- The employee may appeal against your decision.
- You should inform the employee of the decision of the appeal in writing after the meeting.
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REDUNDANCY PAYMENTS & TAXATION
- Subject to the terms of their individual contracts, all employees between the ages of 18 and 65 with at least two years' continuous service are entitled to statutory redundancy pay of one week’s pay, for each complete year of service, up to a maximum of 20 years
- Amounts differ slightly depending on age.
- The formula for calculating a “week’s pay” can be provided on request and is subject to a maximum.
- A statutory redundancy payment is not taxable but the employer may set it against tax as a business expense.
- Employees who are dismissed on grounds of redundancy will still have contractual rights which need to be considered.
- If you wish to offer a Compromise Agreement you will need to take advice on the law around this.
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If you want further information on this or if you are planning to make more than 20 employees redundant, please contact:
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