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Redundancy myths exposed!


No doubt you have all seen in the press some big high street names including Maplin, Toys R Us, Mothercare and House of Fraser either closing entirely or closing stores in a bid to survive in what is an ever changing market where consumer choice, thanks to online retailers has never been so great. With Gaucho, the steak restaurant chain being one of the latest businesses to be put into administration with 1,500 jobs at risk, redundancy is a real threat to UK businesses in the current market.

If your business is forced to consider cost saving measures in order to survive, you may be left with no alternative but to consider reducing headcount and make certain roles within your business redundant.

Redundancy is one of the potentially fair reasons to dismiss an employee if a fair process is followed and there is a genuine redundancy situation. A genuine redundancy situation can occur when an entire business is closing, a particular office or place of work is closing or where there is a reduction in the need for work of a particular kind to be done. It’s therefore important not to make any rash decisions when it comes to redundancy that could expose your business to unfair dismissal claims from unhappy employees.

Lots of people will have an opinion about how a redundancy process should be managed but here are a few of the common questions answered and misconceptions cleared up surrounding redundancy:

·         Can I use a redundancy process to dismiss someone who is under performing?

o   Whilst performance can be a factor in determining who should be selected for redundancy in conjunction with other selection criteria, redundancy is not an option if the reason for the dismissal is actually performance. It is important to remember that in a genuine redundancy situation, it is the role that is no longer required rather than the individual performing it. Performance issues should be dealt with through a disciplinary or capability process that makes it clear what is required from the employee, the timescale for improvement and what support can be offered in order to help them reach the required level of performance.

·         Is everyone entitled to a redundancy payment?

o   Only employees that have been employed for 2 years or more will be entitled to a statutory redundancy payment. If, however, you have a company policy that offers enhanced redundancy payments then you must also follow that policy.

·         Can I just make the newest members of staff redundant (known as last in first out)?

o   Selecting an employee for redundancy simply because they have the shortest service could result in an unfair dismissal claim (if they have the relevant qualifying service) and potentially a claim for age discrimination on the basis that younger employees may by virtue of their age, have shorter service. This approach used to be one of the most common ways of selecting employees for redundancy but is no longer recommended. You should always consider using a wider range of selection criteria such as skills and qualifications, performance and disciplinary record.

·         How long do I have to wait until I can recruit a new employee if the role has previously been made redundant?

o   There is no set time limit that you have to wait in this situation but you should consider the risk of a former employee submitting a claim for unfair dismissal if they believe there was no genuine redundancy at the time they were dismissed. The time limit to bring a unfair dismissal at the Employment Tribunal is 3 months.

·         Is it true that I can’t make a pregnant employee redundant or an employee on maternity leave?

o   If there is a genuine redundancy situation that affects the role that the pregnant employee is performing then if a fair process is followed and is not discriminatory (ie selecting the particular employee over a colleague because they are pregnant), it is possible for that employee to be made redundant. If an employee on maternity leave is made redundant then you will also need to be aware of the special protection that these employees have in relation to being offered suitable alternative positions and ensure that they are included in any consultation process. 

Managing a redundancy process and the affect that it can have on your staff can be very difficult. If you need any advice surrounding redundancy and how to manage the process, please get in touch.

 

Julie Edmonds is Senior Associate and Employment Specialist at JPC Law.

Please contact her for more information

e: jedmonds@jpclaw.co.uk

t: 020 7644 7286

General Enquiries

e: enquiries@jpclaw.co.uk

t: 020 7625 4424

 

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