Redundancy: A Guide For Employers
Making an employee redundant can be a challenging but necessary task to undertake in order to achieve business survival. During recent months, the Covid-19 pandemic has put a large financial strain on many businesses in the UK, resulting in employers being forced to make members of staff redundant in the best interests of their businesses.
How to Make Someone Redundant
What is the Redundancy Process?
Employers should follow a process to avoid the risk of unfair redundancy and keeping the process as smooth as possible.
- Employees that are at a risk of being made redundant must be chosen in a fair and objective manner.
- Employers must inform their employees about the redundancy and the reasons must be clearly outlined.
- Employees have the right to object and consider the redundancy proposals, considering their selection for being made redundant and considering other roles that may be available.
Employers must not hire someone else to do the same job as the employee who was dismissed. Furthermore, fair notice and transparent communication must be provided alongside the employer making substantial effort to explore alternatives rather than redundancy.
A collective redundancy is when an employer makes 20 or more people redundant within a 90-day period. If an employer is making between 20-99 redundancies, they must contact the Redundancy Payment Service (RPS) 30 days before the first redundancy takes place. If 100 or more employees are being made redundant, the employer must contact the RPS 45 days earlier than the first redundancy. The RPS only must be contacted during collective redundancies.
What is the Redundancy Notice Period?
According to Gov.UK, the Redundancy notice period varies by the length of service that an employee has served.
How to Write a Redundancy Letter?
Writing a letter of redundancy can be challenging, however it can be made simpler following these steps:
- Explain clearly and transparently why redundancy is being considered, the position being made redundant with detailed reasoning.
- Provide clear outline of the process to the employee (step by step explanation)
- Establish the confirmation that the employer has reviewed alternative roles within the business and there are no suitable roles for the employee being made redundant.
- Verify that there is not a substitute outcome to prevent the redundancy.
- Clearly state the final date of employment.
- Clarify the monetary provisions that the employee will receive and explain when and how the employee shall obtain them.
What are the Reasons for Redundancy?
A redundancy is valid when an employer no longer requires an employee’s job to be undertaken by anyone due to amendments to the operational needs of the business.
When making a member of staff redundant, it must be undertaken in a fair manner with valid reasons for the redundancy. These reasons include:
- A lack of skills, qualifications and aptitude.
- A poor standard of work and/or performance.
- Poor attendance.
- A negative disciplinary record.
- Redundancy can be based on tenure if it can be fully justified in a fair approach.
Furthermore, employers can invite employees to be made voluntarily redundant. This must be conducted in a fair and transparent manner so that employees have equal opportunity to accept redundancy. Redundancy can also be offered in order to incentivise early retirement. Once again, this must be a transparent and fair process and offered equally across all employees.
What is the Minimum Redundancy Pay?
The minimum statutory redundancy payment that an employer must pay their employees varies based on an employee’s age and tenure.
According to Gov.UK, an employee is entitled to:
- 5 weeks’ pay for each full year of employment up to their 22nd birthday.
- 1 weeks’ pay for each full year of employment after their 22nd birthday.
- 5 weeks’ pay for each full year of employment after their 41st birthday.
Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice. The maximum length of service is 20 years.
Furloughed and Redundancy
How to make Furloughed Staff Redundant?
The furlough scheme has been extended to September 2021; however, some employers will still be required to make employees redundant in the coming months due to operational changes to the structure of their businesses. The redundancy process is still the same as it was before furlough, however, if an employee is made redundant just because they are on furlough, then it will likely be regarded as an unfair dismissal. If the business has fallen to a level where certain job roles are no longer required, then redundancies during furlough are perfectly acceptable outcomes.
Employees are still entitled to receive statutory redundancy pay based on their weekly salary before the furlough scheme rather than their current weekly furlough payments.
In conclusion, making your employees redundant can be a difficult challenge, however, following this article can assist in overcoming any potential hurdles you may face. For further information on the topic, additional resources have been listed below.