Redundancy in employment happens when a company terminates an employee due to a need to reduce the workforce brought about by the closure of a business or workplace; a relocation of the employer’s business; a transfer of business to another employer; or an end or decreased need for a particular type of work or job which may be brought about by the introduction of a new technology or new system to the company.
Employees who have been made redundant have rights to redundancy payment as stated under the UK employment law. However, only those employees who have been employed for at least two (2) continuous years of service and who are working under a contract of employment can be qualified to make such claims. Self-employed individuals or members of a partnership cannot qualify for redundancy payments. Individuals who have resigned are not considered redundant.
Redundancy is a form of dismissal and should be carried out with due process. The employer should make the selection for redundancy based on a procedure that is both fair and objective. It is unlawful for a selection procedure which discriminates against sex (including discrimination against pregnant employees), sexual preference, race, religion or disability. Such cases of discrimination substitute an unfair dismissal and may give rise to further claims in a tribunal.
Employers should always consult their employees at the earliest time possible (at least 30 days) before making them redundant explaining first why they are to be made redundant and also discussing alternatives and the implementation of their redundancy. An explanation of the selection criteria for redundancy may also be asked by the employees. An employer planning to dismiss more than 20 employees should hold a group or collective consultation; otherwise employees may be consulted individually. The object of consultation in both cases should be either to reduce the number or redundancies or to discuss the planned redundancy procedure. Failure by the employers to consult their employees for redundancy constitutes an unfair dismissal.
Employers have a legal duty to offer employees who are to be made redundant of other jobs which they may be capable of performing. Consideration for status, number of work hours and pay are relevant factors to determine whether or not the offered job may be suitable as an alternative.
Redundancy payments are calculated based on the employee’s amount of time spent continuously working, age, and weekly pay.
Employees who have been made or are at risk of being made redundant should always seek the expert advice of experienced employment lawyers in cases where precise calculation of redundancy payments or resolutions of claims arising from unfair dismissal are needed.