Redundancy is a form of dismissal from a job.
It can happen when an employee's job no longer exists. This may be due to an employer needing to reduce their workforce, close the business, or where certain work is no longer needed.
Employers and employees need to know the key points.
Employers need to know:
What does “redundancy” mean?
Redundancy can occur through three types of situations:
If 20 or more Employees are being made redundant over a period of 90 days or less then an Employer has a duty to inform and consult with appropriate employee representatives and notify the Secretary of State (in practice BEIS).
A tribunal may award up to 90 days’ pay (a protective award) in respect of each employee where there has been a breach of this duty.
The employer will also need to ensure that it has followed a fair procedure in relation to individual, including consulting with them properly, so as to minimise claims for unfair dismissal.
Redundancy and unfair dismissal
An employee who has two years’ service is entitled not to be unfairly dismissed. Redundancy is a potentially fair reason for dismissal.
Even if a dismissal is genuinely on grounds of redundancy, whether it is fair or unfair to dismiss for that reason depends on whether the employer acted reasonably in dismissing the employee in all the circumstances.
In order for a redundancy dismissal to be fair the employer must:
Alternatives to redundancy
An employer should consider whether it can avoid or refuse making compulsory redundancies. It can do this by:
Employees with at least two years’ service at the relevant date are entitled to a statutory redundancy payment.
To calculate redundancy pay go to www.gov.uk/calculate-your-redundancy-pay.
An employee may also be entitled to an enhanced contractual redundancy payment set out in their Contract of Employment.
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