Employment Law – Redundancy
When is there a redundancy situation?
There will be a redundancy situation where a dismissal is necessary wholly or mainly due to either of the following:
- there is a cessation of the employer’s business;
- the employer moves their place of business;
- the employer has surplus labour and your role is no longer required in the place where it was carried out.
What is the maximum statutory redundancy payment?
From 6th April 2017, it is £14,670.
What are the classic redundancy situations?
The need for the employee has diminished or ceased
A redundancy situation may arise where a business continues to operate but there is no longer a need for your role to be carried out. For example, a person employed as a salesman for the south of UK region can be redundant when the employer changes the business to focus on the North only. The employer is still in business, but there is no longer a requirement for work in the South.
Redundancy may also arise if an employer reorganises its business to improve its efficiency, so that fewer people are needed to do the same amount of work.
Don’t forget, it is the need for the actual work you carry out which must have been reduced. There may be other roles you can take on, (indeed employers are under a duty to consider what suitable alternative employment you can do), but the fact that the work you were employed to do is no longer available means that you face a potential redundancy situation.
New systems in the workplace
You may be made redundant if a new process or technology is introduced which renders your role unnecessary. The introduction of the new system or technology will not automatically mean that you are redundant. You will be only be redundant if the introduction of the new systems is the direct cause of your work no longer needing to be carried out. Conversely, if your role is still needed to operate the new processes, then this should not equate to redundancy.
Your role no longer exists because other employees are doing the work you carried out
You may believe that you should not have been made redundant because the work you were doing still needs to be done, but has been taken away and given to others. If your role has been passed to one singular person, then the chances are this would be difficult to justify as a genuine redundancy situation.
If, however, the nature of your duties has been amalgamated with other roles, or been outsourced, it is likely to be a genuine redundancy. In this regard, it is accepted that the role still needs to be done- but just not by you in a singular role.
The redundancy may nevertheless still be unfair if you have been unfairly selected or your employer has not followed the correct redundancy process.
The workplace has closed, or is closing down
The most common example of where someone’s work is no longer needed is where the business or part of the business has closed down or is closing down. You will almost certainly be redundant in these circumstances.
The business moves
A redundancy will arise if your employer has ceased or intends to cease to carry on the business in the specific place where you were employed. Although your employer should reasonably consider if it is possible for you to be moved to the new location (indeed you may even have a mobility clause in your contract where you can be forced to move), there may still be a redundant situation if in these circumstances.
The business is transferred to another employer
Where a business is transferred from one employer to another, the transfer does not end the employment relationship. Usually, your contract of employment is carried over into the new business, with your existing terms intact (including your old redundancy terms).
If you are made redundant in connection with a transfer, either by your old employer before the transfer takes place, or by the new employer after the transfer has taken place, it would have to be proved by your new and old employer that there was a real redundancy, and that the transfer was not the only reason (or main reason) for the dismissal. The rules governing such a situation are commonly known as the “TUPE Regulations”.
How easy is it to challenge a selection pool?
Historically it has not been easy to challenge a selection pool, however following recent case law, an employer will have to demonstrate that it has “genuinely applied” its mind to the question of the appropriate selection pool. An employer should in addition consult with affected employees in the pool, which means asking their views. A failure on either count could give rise to a successful challenge and which could amount to unfair dismissal.
If you have a unique role, then a selection pool may not be appropriate as there will be no other affected employees. It is more difficult to challenge a redundancy based on selection if you are the only person carrying out that role, but the redundancy still does have to be genuine and not a sham. If your employer is replacing you with another person (as opposed to amalgamating your role with others, or ceasing doing that work altogether), then this can amount to unfair dismissal.
Who should be in the selection pool?
An employer should initially place all employees doing the same or similar roles in the selection pool, even if they hold different job titles. If employers wish to exclude such persons from the pool, they will need a good reason why.
An employment tribunal is likely to scrutinise a selection pool more closely where the pool is exactly the same size as the number of people to be made redundant.