Redundancy is one of the reasons for employee dismissal in the UK. The companies use this strategy and project it as necessary for their business operations. However, it should be genuine and follow a procedure that makes it a smooth transition for the redundant employee.
We will explore the meaning of redundancy, its types and how to handle it legally and ethically here.
What is Redundancy?
Redundancy is a business process where a job profile is no longer recognised as needed. As a result, the employee handling the position is terminated.
Several reasons can lead to redundancy, including:
- A decline in sales or revenue
- Shutting down of the office or factory
- Moving to a new location
- Downsizing the workforce
While the above reasons are considered genuine, the last may result in disputes.
What is Restructuring?
Restructuring is different from redundancy. Generally, it results from a financial crisis and significantly changes the economic and operational structure. The latter is simply a way to reorganise or improve a business and may not include redundancy.
The Legal Considerations for Redundancy
According to UK redundancy law, the termination process or redundancy should be carried out within the realms of law.
It is of two types: individual and collective.
Although no specific legislation exists for the fair removal of a single employee from a company, certain principles guide such business decisions. These principles include:
- Informing the employee of the possible redundancy situation, its reasons, and the selection process. Employers must offer suitable alternative employment to the employees selected. These opportunities should be subject to a trial period.
- Conduct initial and follow-up meetings with the employee and conduct a redundancy scoring exercise. Before proceeding, the employer must ensure that the HR records are reliable and have no gaps.
- Dismiss the employee, confirm this in writing, and allow him the right to appeal.
- Process the appeal.
Note: A potential redundant employee on maternity leave has the right to receive an offer for a vacancy she is most suitable for.
An employer must consult employee representatives if they decide to lay off 20 or more employees within 90 days. This requirement is called ‘collective consultation’ and is outlined in section s188 of the Trade Union and Labour Relations (Consolidation) Act 1992.
Other legal requirements include:
- Employers must use Form HR1 to notify the Secretary of State (BIS) about the planned layoffs. Not doing so is considered to be a criminal offence and an unlimited fine can be received. The secretary of State must receive this 30 days before the first dismissal when the company is laying off 20 to 99 employees. If the number exceeds 100, this notification should reach 45 days in advance.
- Employees who have served over two years are entitled to redundancy payment.
- In cross-border redundancies, the employers must consult with a European Works Council and seek legal counsel in each jurisdiction.
The Ethical Considerations
The employer must treat his employees with respect and compassion and provide them with support. Redundancy is a sensitive issue and must be dealt with carefully.
- Take legal consultation: Talk to a legal expert to follow the correct legal procedure.
- Follow transparency: Convey employees or representatives clearly about the proposed redundancy and its reasons.
- Be fair: Always pick employees for the right reasons and avoid discrimination based on disability, age, sex, pregnancy or maternity, marriage or civil partnership, religion, race, or sexual orientation.
- Health cover: The employee should be allowed to keep the health insurance they received as part of employment. This helps them have health coverage for a little longer until they find new employment.
- Provide reference: Having a pre-written authority can go a long way in helping redundant employees find good jobs. Allow them this benefit.
- Support the employees: Offer outplacement services and counselling and help employees who are made redundant with their job search.
Redundancy must not be confused with restructuring. Redundancy, as we now know, is a business process leading to unemployment, stress and despair. To make it fair, it should be handled legally and ethically. And to ensure everything goes right, you will need an expert lawyer. So, contact Lawyersorted.com to find the proper support for you.
CEO & Founder at Lawyersorted.com