Redundancy

Be fair, and be seen to be fair

Making someone redundant is not a nice task. But sometimes a changing business or new ways of doing things makes it a necessary one. Here's some information about the legal responsibilities you should be aware of.

�You can't employ someone else to do the same job on a lower wage�

You need to be certain that all redundancies you make are necessary, justifiable and lawful, of course. To make someone redundant, the work you employed them to do must have ceased (or be expected to cease) in the location in which they were (or are) employed.

You can't make somebody redundant and then employ someone else to do the same job on a lower wage. However, you can make someone redundant if it is more cost-efficient to have their work completed by machinery or a computer.

Any volunteers?

If you need to make redundancies from a group of people doing the same job, first establish whether anyone wants to take voluntary redundancy. However, there is a risk your most valuable, experienced and longest-serving employees will put themselves forward. This could mean losing your better people – and having to pay out more in settlement.

�Some firms have a "last in – first out" policy�

Some firms have a “last in – first out” policy. The disadvantage of this is that an employee who joined you most recently might be much more productive than another who has been with you for years.

When choosing between employees doing the same job, always base your decision on ability to do the job. Particular care should be taken to ensure that no employees can say they have been treated unfairly on grounds of race, sex, disability, sexual orientation, religion or belief.

There are other reasons a business can be found to have unfairly dismissed an employee. These include maternity-related grounds or for requesting to work flexibly.

Alternatives

Where possible, the employer should offer alternative work which is suitable to the employee. This should be in writing and before the employee's current contract ends. People who turn down suitable alternative employment might lose their entitlement to redundancy pay.

Statutory redundancy pay is based on:

To calculate how much you will have to pay visit the DTI's ready reckoner website.

If your business will become insolvent as a result of making statutory redundancy payments, help is available through the Redundancy Payments Directorate.

If you will be making between 20 and 99 employees redundant you must start consulting your staff (or their representatives, if applicable) at least 30 days before taking any action. When there are more than 100 proposed redundancies, the consultation process must start 90 days in advance.

Where there are no employee representatives (eg a trade union), employees much be spoken to individually and given the chance to appeal under your statutory discipline and grievance procedures.

What next?