Redundancy

In carrying out a redundancy, every employer will be keen to act as
sensitively as possible, and, above all, to avoid an unfair dismissal. With a
reduction of the qualifying period for unfair dismissal to one year and the
recent increase to £50,000 for the limit on the compensatory award, this has
become a key strategic issue.

Although the legal position is relatively complex, there are four steps
employers can take towards ensuring the dismissal is fair.

1. Genuine redundancy

The position here has been simplified by the recent House of Lords’ decision
in the Murray case. For a genuine redundancy to take place, tribunals need
ascertain two facts. First, whether a particular state of economic affairs
exists – for example, whether the employer’s requirement for employees to carry
out work of a particular kind has diminished – and, if so, whether the
dismissal is attributable to that state. And, second, whether there has been
fair selection.

2. Fair selection

The employer will need to show that the individual chosen for redundancy has
been fairly selected by objective criteria. The most popular selection process
is a points system, taking into account a number of objective issues. Employees
should be aware, though, that employees may ask the tribunal for disclosure of
the point scores. Before starting on selection, employers should also be
careful to identify the "pool" of staff from which to select.

3. Alternative employment

Evidence is required of the employer having considered alternative vacancies
within the organisation for those selected. This may mean canvassing associated
companies. If in doubt, always put lower status and lower paid jobs to the
individual, as it is otherwise open to the employee to state that they would
have considered a lower status job had it been offered.

4. Consultation

The employer should be careful to consult with the selected candidate before
the decision to implement redundancy is made. It is highly recommended that a
minimum of two meetings are scheduled with each employee, at least a week
apart, so that an explanation of the situation and outline of the terms can be
given, with a subsequent opportunity for the employee to give their views. The
employee should also be encouraged to debate the matter with the employer in
the interim. It is wise not to make a formal decision to implement the
redundancy until the day after the second consultation. Clearly this requires
forward planning.

In addition, unionised employers should bear in mind that there may be a
duty to consult collectively as well as individually. For large-scale
redundancies, there are minimum periods for consultation and statutory duties
to consult trade union or elected employee representatives. When 20 or more
individuals at the same establishment are to be made redundant over a period of
90 days, consultation should begin in good time, which generally means at least
30 days in advance of the first dismissal. Where 100 or more redundancies are
intended within the same period, consultation should begin at least 90 days in
advance of the first dismissal. Warning to the DTI must also be given in these
circumstances.