Three issues to consider while determining the fair reason for employee redundancy
Given that it is done correctly and the employer follows the law, redundancy is regarded as potentially fair grounds for dismissal.
The employee who was terminated may be able to file a claim stating that the termination was unfair and/or discriminatory if the redundancy is not genuine, the proper procedure is not followed, or the reasons for the employee’s redundancy are unjust.
What exactly is a real redundancy?
Only if there is no longer a necessity for a position, should an employee be let go. An unjust dismissal would be one that is not recognised as a real redundancy.
The following are some common ways that redundancy occurs:
Work performed by the impacted employees is no longer necessary since there is no longer a business necessity or new processes have been established; workplace closure; business relocation; the task being done by others; or the business being transferred to a new employer.
Workers cannot be terminated due to their own behavior or interactions with coworkers, yet some behaviors may make them candidates for termination.
Employers should have tried every other viable alternative before deciding to make redundancies. This would entail taking new work arrangements, such as part-time employment, into consideration. Employers must be careful not to take other actions that would negate a genuine redundancy situation. For instance, hiring new employees in one area while conducting a redundancy exercise in another, or only laying off one worker when the workforce is sizable, could lead to complaints that the redundancy is not genuine.
An employer must choose which workers from a redundancy pool are to be laid off, assuming that the reasons for the layoff are valid and that the pool was fairly chosen. The grounds for terminating an employee must adhere to certain criteria in order to be deemed fair.
The redundancy pool
The group of workers who face redundancy is known as the redundancy pool. This could involve just one worker in some circumstances or the entire workforce. In other situations, it might be a particular project team or staff member with a certain job title. The pool will be determined by the causes of the layoffs and the positions that are no longer needed.
Since the redundancies themselves may be contested if the pool’s composition is unfair, choosing the redundancy pool takes careful analysis.
Employers have the option of laying off every member of the redundancy pool and asking them to apply for new positions within the company. As an alternative, the employer could decide which workers to hire.
What is the just cause for redundancy?
Among the justifications for redundancy are:
- history of punctuality and attendance abilities and experience
- performance status criminal record
The amount of time a person has worked for a company may also be a factor in redundancy decisions, although caution should be exercised because a last-in, first-out policy, for instance, can be considered age discrimination if it primarily impacts younger staff. So, length of service should not be the sole factor in determining whether an employee is laid off, and companies must be able to justify its inclusion. The credentials of a worker may also be taken into consideration, but they cannot be the only factor in redundancy decisions.
Fundamentally, an employer must operate impartially, consistently, and fairly while evaluating the causes of redundancy. Subjective justifications won’t be accepted as legitimate redundancy grounds. On the basis of written documentation, such as medical records, performance reviews, and disciplinary records, the aforementioned factors can all be evaluated objectively.
Normally, a list of requirements or justifications is created, and the employer evaluates the impacted employees based on each of them. The redundancy pool must be graded equally for everyone in order to be fair. The personnel chosen for redundancy will be those with the lowest score. It’s crucial to have at least two persons decide each employee’s score, and they should be familiar with the pertinent employee and their performance.
Be aware that employees have the right to request a copy of their score and an explanation of it. Therefore, it is essential that the employer be able to defend the reasoning for their choice. An employment tribunal will not declare a redundancy to be an unfair dismissal merely because of a disagreement, provided that the employer followed the correct procedure and acted impartially and objectively. However, an employee may disagree with the scoring and may challenge the redundancy as a result.
However, it would not always be simple to use these justifications for redundancy, therefore discrimination issues need to be taken into account. An employee with a disability could be subjected to discrimination, for instance, if a redundancy decision is made based on performance or sick leave.
Automatically unjust justifications for layoffs
Companies are prohibited from laying off workers for the following reasons:
- age, gender, sexual orientation, gender reassignment, disability, religion or belief, marriage, civil partnerships, and situations in which an employee has requested a statutory right, such as minimum wage, maternity leave, or yearly leave, or taken health and safety action;
- the employee being a member of a union, a union representative, or an employee representative;
- working part-time or under a fixed-term contract; and the whistleblowing.
When an employee is let go for one or more of the aforementioned reasons, the dismissal is automatically judged unfair. These justifications cannot be used, in whole or in part, to fire an employee due to redundancy. Employees who fall within the aforementioned categories may still be let go as long as the reasons for doing so are justifiable and the applicable unfair cause is not taken into account when choosing which employees to let go.
When identifying personnel at risk of redundancy, care should be taken to ensure that clear, objective, and fair selection criteria are consistently applied. Employers should also consider situations that could give rise to claims of automatic unfair dismissal, such as when a worker is let go soon after becoming a union representative or after returning from maternity leave, when a worker has previously argued for the right to minimum wage and is chosen for redundancy while other workers who perform a similar job are not.
Also, the reasons for redundancy should not be personal, such as a line manager’s dislike of a particular person or a worker’s lack of participation in social activities. Employers are recommended to take into account any indirect discrimination-related factors as well, since these will also be seen as unfair redundancy-related factors.
Appeal for dismissal
An employee who feels that the redundancy process or the reasons for their redundancy were unfair may seek to appeal against the redundancy decision.
As an employer, you can accept or reject an appeal. If you accept their appeal while they are still employed, you can offer them back their job and they will continue in employment under their original contract of employment.
If you accept their appeal once their employment has terminated, they can return to work on their original contract of employment and must be paid for the period that they were not working although they must also repay any redundancy payments made to them.
If you choose to reject their appeal and proceed with their redundancy, an assessment should be conducted to understand the risk of a claim being brought. Employers are recommended to take into account any indirect discrimination-related factors as well, since these will also be seen as unfair redundancy-related factors.
Employment tribunal claims and compensation
Affected employees may file an unfair dismissal and/or discrimination suit against the employer in an employment tribunal if they believe their redundancy was unfair.
An employee must have two years of continuous employment with the employer in order to be eligible for compensation for unjust discharge.
It’s important to note that allegations of automatic discrimination or unfair dismissal are exempt from this condition.
The employee will be entitled to a basic award payment from the employer and may also be eligible for a compensatory award payment if an employment tribunal determines that there was an unjust dismissal.
Since the employee cannot earn the basic award and redundancy compensation at the same time, they are not eligible for it if they have previously received statutory redundancy pay. With a cap on the amount, the compensatory award seeks to restore the employee to the situation they would have been in if they had not been unfairly fired. Currently, this is the lesser of £88 519 or 52 weeks of gross pay. Additionally, the impacted employee must demonstrate that they have made an effort to lessen their loss, such as by seeking for another work.
The employer will be forced to pay a discrimination award if the employment tribunal determines that there has been discrimination. This sum may also include money to make up for emotional harm; there is no cap on it. As a result, doing this can be expensive.
Avoiding allegations and risk of redundancy
The most straightforward way for an employer to prevent claims of unfair dismissal is to make sure that the redundancy grounds are justifiable, fair, and objective, and that the proper redundancy procedure is followed. When choosing a redundancy candidate, a reason should not be taken into consideration if there is even a remote possibility that it could be viewed as directly or indirectly discriminatory, unfair, or subjective.
Important details for employers include:
- Use only rational, explicable, and verifiable causes for redundancy, and consistently and fairly evaluate each employee in the redundancy pool;
- retain written records of all discussions and decisions pertaining to the grounds for redundancy, how these were determined, and how staff members were evaluated in light of them;
- ensure that all employee records are kept up-to-date and include sufficient detail, for example, sickness records and disciplinary records;
- Follow any documented redundancy procedures you have in place and utilise any selection criteria specified in those procedures; make sure the individuals involved in the evaluation process are familiar with the affected employees and have a direct involvement in their job;
- make sure the entire redundancy procedure is conducted honestly and correctly;
- It’s important to keep in touch with the affected personnel over the full redundancy process. Make sure to give them as much information as you can, and to explain the decision-making process at each point;
- establishing an appeals process to allow unhappy workers to voice their complaints and contest the redundancy decision;
- Ensure that your redundancies are real and get legal counsel as soon as you can, preferably before the redundancy process starts.
Get help with the redundancy process
The employment attorneys at Clarity Simplicity can assist with all facets of the redundancy procedure, including guidance on fair reasons for redundancy and how these affect the fairness of the redundancy selection process. We provide thorough advice on minimizing the legal risks of terminating employees, including more complex scenarios involving furloughed workers and structuring settlement agreements, in close collaboration with our HR specialists. Speak to our professionals for guidance and assistance.
FAQ for redundancy process
What is the just cause for redundancy?
Fair redundancy justifications must be quantifiable, measurable, and objective. For instance, performance and disciplinary history, abilities and experience, skills, and attendance history are all taken into consideration as justifications for redundancy. Qualifications and service history may also be taken into account.
Do you have an explanation for the redundancy?
Absolutely, employers must be able to articulate and defend their decisions to lay off workers. If the employee feels that these are unfair, they may appeal the decision or file a claim with the employment tribunal accusing the employer of discrimination or unfair dismissal.
What standards apply to redundancy?
A real redundancy requires that the position no longer be required. This typically results from a downturn in a company, the closure of the workplace, relocation, someone else taking over, the introduction of new procedures, or any of the aforementioned factors.