Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:
- changing what it does
- doing things in a different way, for example using new machinery
- changing location or closing down
If you’ve been impacted by coronavirus (COVID-19), you can get funding to continue to pay your employees instead of making them redundant. This is known as furloughing.
For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.
Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.
All employees under notice of redundancy have the right to:
- reasonable time off to look for a new job or arrange training
- not be unfairly selected for redundancy
You should always take steps to avoid redundancies before dismissing staff.
Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.
Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.
If you do not consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.
You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.
There are no set rules to follow if there are fewer than 20 redundancies planned, but it’s good practice to fully consult employees and their representatives. An employment tribunal could decide that you’ve dismissed your staff unfairly if you do not.
Consultation does not have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.
Follow these steps.
- You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.
- Consult with trade union representatives or elected employee representatives – or with staff directly if there are none.
- Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.
- Respond to any requests for further information.
- Give any affected staff termination notices showing the agreed leaving date.
- Issue redundancy notices once the consultation is complete.
Notify RPS by filling in form HR1. Instructions on where to send it are on the form.
The deadline for notifying RPS depends on the number of proposed redundancies.
|Number of proposed redundancies||When notification to RPS must be given|
|20 to 99||30 days before the first redundancy|
|100 or more||45 days before the first redundancy|
You can be fined an unlimited amount if you do not notify RPS.
There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.
|Number of proposed redundancies||Minimum consultation period before dismissal|
|20 to 99||30 days|
|100 or more||45 days|
Information you must provide to representatives or staff
You must provide written details of:
- the reasons for redundancies
- the numbers and categories of employees involved
- the numbers of employees in each category
- how you plan to select employees for redundancy
- how you’ll carry out redundancies
- how you’ll work out redundancy payments
Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).
Story originally appeared on fca.org.uk