Redundancy and reorganisation 

As your business changes it may be necessary to reorganise your staffing arrangements. Sometimes you may need to make redundancies. An important part of making redundancies is complying with the legal implications of change for the business and for employees.

Businesses will inevitably from time to time need to reorganise which can result in the need to make redundancies. Redundancy is a fair reason for dismissal, however, it is treated differently as it requires the employer to follow certain steps to ensure the redundancy is carried out fairly. The consequence of a redundancy procedure not being followed correctly is, that it allows the employee(s) being made redundant to claim for wrongful dismissal, unfair dismissal, a “protective award” or a redundancy payment, either based on the employee’s employment contract or the statutory minimum entitlement.

What amounts to a redundancy?

Redundancy involves either the closure, (whether temporary or permanent) of a business as a whole, the closure of a particular workplace where the employee was employed or, a reduction in the size of the workforce.

What is the correct redundancy procedure?

When there is a genuine requirement to make redundancies, the employer must identify the correct pool of employees who are at risk of redundancy. You must consult with employee representatives if 20 or more employees are going to be made redundant at a site within a 90 day period. This should involve a discussion of the business’s reasons for making the closure or reduction in the workforce. If the employer fails to properly consult they can be ordered to pay a protective award. This can mean that the employer must keep the employees on and pay their wages for a certain amount of time, regardless of whether they are working or not.

If there is a group of employees that are at risk of being made redundant, the employer must consider what type of work they do and why the demand for employees to do that work has stopped or decreased. Selection criteria should be objective and fair and not based on an individual’s own view of each employee. Employers should also, where possible, offer alternative employment to those who are going to be made redundant, with the opportunity to trial the new position.

How can Taylor&Emmet LLP help?

Taylor&Emmet’s Employment Team are experienced in advising on redundancy, reorganisations, restructuring and consultation obligations. We can advise you on the steps you need to take to help you avoid unfair dismissal claims. We can also review or provide redundancy selection criteria and letters to ensure consistency and clarity across your business.