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Published 2 September 10
Redundancy occurs when an individual worker's role is no longer required within a business and it is not possible for them to be redeployed. This may be due to the introduction of new technology, the relocation or the closing of a business.
Redundancy is not an acceptable means of getting rid of a member of staff whose performance is below par: the disciplinary procedure should be followed in this instance. Redundancy is defined as 'dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related'.
Staff members being made redundant must be consulted and warned about the situation. If workers are not treated fairly and the proper procedure for redundancy is not followed, they may be able to make a claim for unfair dismissal. For a redundancy to be genuine the job that the employee does must disappear but you can still take on new staff but they must not do the work the redundant employee was doing.
It may be necessary to select one staff member for redundancy where an employer has two or more employees. In this case fair selection criteria for the redundancy must be used. Such criteria would include selection on:
- Skills, qualifications and aptitude, in order to to help keep a balanced workforce.
- The standard of the worker's performance, providing supporting objective evidence.
- Adaptability of staff members, as it may be important that employees accept different types of work as needs change.
- Attendance and disciplinary records of staff members. This must be applied consistently, ensuring accurate records and acceptable reasons for absence. Absences for maternity, paternity or adoption leave must not be taken into account.
The use of certain selection criteria will result in any subsequent redundancy dismissal being automatically unfair. This would include selection due to trade union activity or legal industrial action, actions taken on specified health and safety grounds, reasons associated with pregnancy, maternity, paternity, adoption and parental leave or reasons relating to regulations on part-time workers.
Redundant workers are also likely to be entitled to a Statutory Redundancy Payment (SRP), calculated from age, length of continuous employment and weekly pay. A redundant employee also has the right to receive a written statement setting out the amount of any redundancy payment and how it is worked out.
To receive a SRP, an individual must:
- Be an employee, (i.e. not a casual worker, agency worker, or be genuinely self-employed).
- Have a minimum of two years' continuous service.
- Have been dismissed, laid off or put on short-term working.
Employees under notice of redundancy also have the right to:
- Be offered alternative employment wherever possible (or they can claim unfair dismissal).
- Have a trial period in the alternative employment without losing their right to an SRP.
- Have reasonable time off on full pay for job-hunting or to arrange training.
- Not be unfairly selected for redundancy (or they can claim unfair dismissal).
It is important to note that redundancy is not the same as lay-offs or short-time working. A lay-off happens when you temporarily cannot give an employee paid work. Short-time working is where the employee's pay is less than half a week's pay because they either have no paid work for a number of working days in a week or work a reduced number of paid hours for a number of working days in a week. Laying-off a worker or putting them on short-time working can only generally be done by contractual agreement. If you have no contractual right to lay off an employee without pay but you do so, you will be acting in breach of contract.
The laws covering redundancy procedures and employee rights cover England, Scotland and Wales. Different laws for redundancy apply in Northern Ireland.
Letter templates for redundancy can be found here.
Information on calculating Statutory Redundancy Pay
Further information on redundancy