Redundancies and Reorganisations
The law relating to redundancies and reorganisations is complex.
There are legal definitions of what amounts to a redundancy situation and the requirement to ensure that a fair procedure has been adopted when redundancies are made.
As well as individual consultation, there are also more onerous requirements for collective consultation where it is envisaged that more than 20 employees will be made redundant within a period of 90 days. There are civil and criminal penalties on employers who do not comply with obligations to consult collectively, in addition to claims by individual employees or their representatives.
Banner Jones’ Employment Law specialists have many year’s experience advising and supporting employers through redundancy procedures, from businesses with only 1 employee through to businesses with over 1000.
Redundancy Procedure Guide
Frequently Asked Questions
Yes as some employees may be happy to take the offer however for others it may mean them moving house. It is unlikely an employment tribunal would consider this as a suitable alternative employment, however this will be dependent on the individual circumstances.
During the consultation process you have to disclose the following in writing to the appropriate representative.
- Reasoning for your proposal
- The number and description of employees you propose to make redundant
- The total number of employees that are currently employed with that description
- The method which you are going to use to make people redundant
- The method in which you propose on carrying out the dismissal including the period in which the dismissals are going to take place
- The proposed method of calculating the amount of redundancy payments
Most likely. The second exemption to the requirement that people should not be treated differently due to their age relates to length of service requirements that mirror a similar requirement in a statutory benefit, as for example contractual redundancy schemes where service related provision is more generous than under the statutory Scheme. We advise you to seek legal advice if you are in doubt.
It is likely that older employees are likely to have been with you for longer therefore using length of service as a criterion could potentially be classed as age discrimination. Men may have longer service than women so it could potentially be sex discrimination also.
The high court has said in a previous case that using length of service as a criterion for selecting employees for redundancy can in some circumstances be justified.
In that case, the employer argued that taking long service into account was a benefit. The age discrimination rules contain an exception that allows an employer to use length of service as a criterion in relation to the award of a benefit that is potentially discriminatory where it fulfils business needs. Do seek legal advice as each case is unique and has different circumstances.
The amount of statutory redundancy payment depends on factors like age, length of service and pay. This is calculated using the following points:
- For each full year of service in which the employer was aged 41 or over assign one and a half weeks pay
- For each year the employee was aged between 22 and 40 offer one week’s pay
- For each year in which the employee was aged up to 21 offer half a week’s pay
An employee must have at least 2 years employment at the relevant date in order to be able to receive redundancy payments. 20 years is the maximum length of service which can be taken into account.
Age related limits on redundancy entitlements, including redundancy pay remain notwithstanding the legislation which bans age discrimination. However younger works are now able to claim for services before the age of 18 and older workers are able to claim for services beyond 65.
The week’s pay is subject to a maximum amount of £450 per week.
If you are looking to encourage voluntary redundancies you may wish to offer more than the statutory redundancy. You should ensure however that you do not create a contractual right to such enhanced payments.
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