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Redundancy

We are a small manufacturing firm and are, unfortunately, assessing the potential cost of a number of redundancies. How can we calculate roughly what our staff will receive as a pay out?

The statutory redundancy payment is calculated based on the number of years a person has worked for a company, how old they are and their weekly pay.  Since October 2006 if you make someone redundant they would receive;

The maximum number of years that can count is 20 towards the calculation.  The weekly pay rate is usually the gross weekly pay at the time of redundancy up to the maximum limit of £350. If the weekly pay fluctuates, an average of the 12 week period running up to the redundancy date is taken.

 


I’m making a number of my employees redundant. Do the employees have a right to time off to look for a new job?

Yes. An employee who is being made redundant is entitled to take reasonable time off with pay (but no more than 2/5ths of a week's pay in total) to look for another job, or to arrange training for future employment. The employee, who must have at least two years' continuous service, can take the time off within working hours while under notice.


What is the consultation period if I make 30 people redundant?

The minimum consultation period required is:

If you are making less than 20 employees redundant you should follow the statutory dismissal procedure, however it is recommended to still consult with employees to identify if there are any alternative opportunities which could prevent the redundancy.


My company is considering several lay-offs for economic reasons and we, in HR, have been asked to advise which criteria should be applied to select staff for redundancy. Some in HR believe we can use the 'last in, first out' approach. I'm concerned this may not be very watertight, legally.

You are right to be concerned. Operating a 'last in, first out' redundancy policy used to be the easiest option for employers, as the alternative often involved using complex selection matrices, which used criteria that could discriminate against women and the disabled, such as attendance records. However, the enactment of the age discrimination legislation in 2006 has made the use of 'last in, first out' less straightforward. If the age profile of your workforce means that most of those selected for redundancy on a 'last in, first out' basis are younger employees, you could lay yourselves open to the risk of claims for indirect age discrimination.Although the legislation does allow you to implement a policy with an age bias to pursue a legitimate aim, you need to be able to objectively justify it and show that the means you are using to achieve that aim are proportionate. It would be down to a tribunal to decide whether selecting those who have been in the job the shortest time to cut costs by minimising redundancy payouts is sufficient justification or is proportionate. Indeed, claimants could argue that it is more cost-effective in the long run to retain younger staff as they are generally lower paid , and potentially more productive pound for pound, than long-serving, older workers. On a more practical level, 'last in, first out' takes no account of skills that you might want to retain. You should consult staff on alternative options to redundancy, such as modified hours or job sharing. Where suitable alternative options can be identified, you should then consider their feasibility from a business perspective.Where feasible alternatives cannot be found, you will need to record your reasoning for rejecting the other options, and for selecting certain staff for redundancy, before making any job cuts.If you have considered the issues thoroughly and have a paper trail to show your rationale, your organisation should be in a far stronger position to defend yourselves should an age discrimination claim arise.


We have almost finished a redundancy procedure, making an employee redundant who is in a one-off role. He is now working out his notice. We have just received a resignation from another employee which was completely unexpected. This creates a vacancy, which is different from the post held by the employee, soon to be dismissed by reason of redundancy, although we are fairlysure that he could do the job. How should we proceed? Should we withdraw his notice?

To be fair you will have to tell the employee working out his notice that there is now a vacancy and let him know the full details. It will be up to him whether he considers applying for the post. He does not have to do so and could continue to work his notice and take his redundancy pay.  You cannot withdraw his notice. Notice continues to run once it has been given, unless both the employer and employee agree to end the notice early, for example, if he were to be successful in applying for the new post.  It is unlikely that the vacancy would be considered to be suitable alternative employment as you have said that it is a different role. However, if an employee does refuse a suitable alternative role, he would forego his redundancy pay.


We recently undertook a process of redundancy. However, trading is looking up for us and we would like to re-engage a few employees. As an employer am I legally obliged to wait a certain period of time before re-employing an employee who was dismissed for redundancy?

Once employment has terminated by reason of redundancy, if the economic situation suddenly changes and the employer then needs to employ someone, it is under no obligation to offer the redundant employee his or her job back. The employer is entitled to recruit someone else. Having said that, if the employer does wish to re-employ the redundant employee, it may do so and there is no obligation on it to wait a certain period of time before offering re-employment to that individual.

When assessing whether there was a genuine redundancy situation for the purposes of the fairness of the dismissal, an employment tribunal will look at the entire period from the start of redundancy consultation until the employee's employment terminates on the ground of redundancy. If the employer engages someone else in a particular role shortly after making an employee redundant from that role, this may cast doubt on the genuineness of the redundancy should the employee challenge it by bringing an unfair dismissal claim. In these circumstances, the employer would need to demonstrate that the redundancy situation was still subsisting at the time the redundant employee was dismissed and it was only after that date that its economic position changed.

If the employer does wish to re-employ the redundant employee but also wants to ensure that his or her continuity of employment is broken by the intervening redundancy, there should be a clear calendar-week break (starting on a Sunday) between the termination of one period of employment and the commencement of the new period. Any continuity of service that there might otherwise have been will normally be broken, provided that there has been no agreement between the parties to preserve continuity and the new contract makes clear that it is a new period of employment. To err on the side of caution, a minimum two-week break in service would be advisable. For statutory redundancy payment purposes, continuity of employment is broken where a redundancy payment has been paid to the employee and the employee is then re-engaged under a new contract of employment. This prevents the employee's service counting twice for statutory redundancy payment purposes.


I am considering making redundancies in my company. I have one employee who has been in post for more than five years but is hired through an employment agency. Is he entitled to redundancy pay?

It depends whether this person is regarded as a memeber of staff or not.  If he is always thought of and treated as an agency worker then you will not be responsible for any redundancy payments.  If he has worked only for you through the agency for the whole of the five years then he may try to claim that he is an employee and not an agency worker and make a case to recieve a redundancy payment.

Look carefully at his contract.  If the agency has been careful about its terms and you haven't "treated" him as an employee (for example, giving him access to employee benefits etc) then he would be regarded as an agency worker and does not have any rights to a redundancy payment.


We have recently been consulting with staff regarding potential redun­dancy. We requested that staff consider a number of options to minimise costs, including voluntary redundancy, sab­baticals and extended unpaid leave. We set a deadline for such requests to be considered which has now passed.

You must ensure that you treat all staff similarly. For this reason you cannot consider any applications for voluntary redundancy without again opening it up to everyone. Since your deadline passed, circumstances may have changed and others may wish to be considered if the offer is put back on the table.