One in five employers planning redundancies this year, ACAS warns

A survey carried out by ACAS, an independent public body whose aim is to improve workplace relationships, has found that one in five employers are likely to carry out redundancies this year. For many businesses, this will mean making difficult decisions. A redundancy exercise can be a daunting and stressful process for everyone involved.

There is a strict process to follow whilst carrying out redundancies and failure to comply with it can result in an Employment Tribunal claim. Taking legal advice to understand all the steps is paramount to minimise risks, avoid bad reputation and keep morale among employees.

Definition of redundancy

First, businesses need to assess if there is a genuine redundancy situation. The legal definition of redundancy includes the following scenarios:

• Closure of the business in its entirety;
• Closure of a work site where employees work;
• A reduced need for employees to do work (i.e. there are more employees than necessary); and
• Whilst the levels of work remain the same, the need for employees to do that work is reduced, for example, due to reorganisation.

If there is a genuine redundancy situation, the business will need to draw a plan and start a consultation process.

Redundancy process

Employers are required by law to follow a fair process. There is no legal definition of what a redundancy process should look like, however case law has established that a fair process needs to include the following:

• Giving affected employees as much warning as possible of the possible redundancies;
• Designing a selection criteria to be used for selecting employees for redundancy. The criteria used needs to be objective and cannot be discriminatory;
• Designing a pool, or more than one, with the affected employees and the reasons why affected employees have been placed into that pool;
• Applying the selection criteria objectively to the affected employees;
• Consulting with the employees selected for redundancy and sharing the selection criteria with them; and
• Considering if there are any suitable alternative roles within the company that could be offered to avoid dismissal.

The above steps should not be seen as a box ticking exercise. Employers need to engage in the process and be expected to have their decision challenged by selected employees.

In our experience, businesses often leave individuals who should have been included in a pool out because they do not want to make them redundant. This disparity of treatment can give rise to a claim. We also find that the selection criteria used is often subjective or has not been applied properly.

However, the issue that gives rise to most Employment Tribunal claims is the lack of meaningful consultation with affected employees. Employers should approach a consultation with an open mind and give employees the opportunity to challenge their selection for redundancy. In most Tribunal claims, employers already go to a consultation having made the decision that the employee in question will be made redundant.

Selecting employees for redundancy on the basis of a protected characteristic, such as disability, pregnancy or maternity or because they have raised serious concerns about the business, will be automatically unfair and discriminatory.

Get in touch

Our Solicitor, Laura Ramos, is highly experienced and part of Wards Solicitors' specialist employment team. She deals with Employment Tribunal claims and provides HR support to businesses.

Please get in touch with Laura by phone on 0117 929 2811 or email at Laura.Ramos@wards.uk.com if you or your business need any employment law advice.