Employer redundancy legal advice

How to make staff redundant

Redundancy is one of the most challenging processes an employer may face. It requires careful management, thorough understanding of legal obligations, and sensitive handling of affected employees.

Our employment law team provides comprehensive support throughout the redundancy process:

• Initial planning support - we help structure your redundancy plans to minimise legal risks.

• Documentation review - ensuring your letters, scoring criteria, and consultation materials are legally compliant.

• Complex case handling - support for high-risk redundancies involving senior executives or protected categories.

• Settlement agreements - we draft and advise on settlement terms where appropriate.

• Tribunal defence - we represent employers if claims arise despite preventative measures

We operate on flexible fee arrangements and can provide fixed-fee packages for redundancy support. Contact our employment team for an initial discussion about your needs.

Fair process

Following a fair redundancy process is not just a legal requirement - it's a business necessity because a consistent and fair process protects an employer :-

• Against unfair dismissal and/or discrimination claims - claims can cost up to 52 weeks' pay or £105,707, whichever is lower. Claims for discrimination have no compensation cap.

• Maintains reputation - poor processes can damage employer brand and future recruitment.

• Workplace morale - remaining employees watch how their colleagues are treated.

Risk areas when considering redundancies

Managing redundancies presents significant legal and commercial risks for employers often arising, in our experience, due to :-

• Failing to plan thoroughly before starting - Develop a comprehensive strategy including timeline, documentation requirements, and communication plan. Document clear business reasons for the proposed redundancy, ensuring you document consideration of alternatives, check any existing policies and procedures and decide on selection criteria.

• Insufficient consultation - good faith consultation must be meaningful and two-way with proper time for consideration.

• Assuming there are no risks if employee not employed for 2 years or more - whilst an employee who does not have 2 years continuous employment cannot claim unfair dismissal, this ignores the potential of discrimination claims and/or contractual claims.

• Predetermined decisions - making decisions before consultation ends invalidates the entire process

• Selection criteria - must use measurable, objective factors with clear evidence

• Poor documentation - keep detailed records of every meeting, decision, and selection score

• Ignoring suitable alternatives - Consider and document all options to redundancy including redeployment

• Discriminatory practices - Check impact on protected groups and ensure fair treatment

Employer genuine grounds for redundancies

When establishing redundancy situations, employers must ensure they fall within legally valid categories. A genuine redundancy can only arise in specific circumstances defined by law, namely :-

• Business closure - complete shutdown of the entire business operation requiring all positions to be made redundant.

• Workplace closure - Specific location or office closes while business continues elsewhere.

• Reduced need for employees - Less work of a particular type or changes in how work is performed.

Selection pools and criteria

Employers have discretion in choosing criteria, they must be able to justify their choices and document fairness in application. Employers can create their own criteria and weight criteria accordingly based on business needs. Common criteria our employer clients tend to include are :-

• Length of service - can be considered as part of wider criteria but not sole factor.

• Skills and qualifications - Current capabilities and relevant certifications needed for future roles.

• Performance metrics - Documented performance reviews and measurable achievements.

• Attendance records - Reliable attendance excluding protected absences.

• Disciplinary history - Recent relevant issues and patterns of behaviour.

Do collective consultation requirements apply?

Where 20 or more redundancies are proposed within 90 days, collective consultation is legally required. Different rules apply depending on the number of affected employees. When 20-99 redundancies are proposed :-

• Minimum 30-day consultation period - Must complete before any dismissals take effect

• Notify Secretary of State - Submit HR1 form before consultation begins

• Elect representatives - Arrange fair elections if no recognized union exists

When 100+ redundancies are proposed:

• Minimum 45-day consultation period - Extended timeframe reflects larger impact

• Enhanced documentation - Provide detailed information about impact and mitigation

• Same notification rules - HR1 form still required

Protected Categories

Certain employees have enhanced protection during redundancy. Special care must be taken when these employees are in scope.

• Pregnant employees - enhanced protection rights and priority for alternative roles.

• Maternity/paternity leave - priority for suitable alternative employment.

• Employee representatives - protected from detriment due to their role.

• Discrimination concerns - protected from victimisation.

• Whistleblowers - protected from selection due to protected disclosures.

Redundancy Payments

Understanding payment obligations helps with budgeting and ensures compliance with legal requirements. Different rules apply to statutory and enhanced payments.

Statutory Redundancy Pay

• Minimum legal requirement - Based on age, length of service and weekly pay

• Weekly pay cap - £544 as of 2023, updates annually

• Service limit - Maximum 20 years' service counted

• Tax free allowance - Up to £30,000

Enhanced Redundancy Pay

• Check contracts - Review for any enhanced terms

• Consider past practice - Previous redundancies may set precedent

• Apply consistently - Document any variations from standard approach

Notice Periods

Notice requirements run alongside redundancy entitlements. Both statutory and contractual notice must be considered.

• Statutory minimum - One week per year of service up to 12 weeks

• Contractual notice - Apply whichever is greater

• Payment in lieu - Check if contract allows for this

Appeals Process

A fair appeals process is essential for demonstrating procedural fairness. It provides a final check against unfair selection.

• Offer appeal right - include in dismissal notification.

• Independent review - use manager not previously involved.

• Allow accompaniment - same rights as consultation meetings.

• Consider new information - review any fresh evidence presented.