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Unfortunately, in light of the current economic climate, ‘redundancy’ is a word most of us are familiar with.
If an employer wants to dismiss its employees, then it should have a fair reason to do so, and it should also follow a fair procedure. Redundancy is one of the five potentially fair reasons for dismissal, along with conduct, capability, statutory restriction, and ‘some other substantial reason’.
In order for a redundancy to be fair, there should be a genuine reason for the redundancy. Legally speaking, there are three ways in which a genuine redundancy situation can arise:
- Business closure (closure of the whole business);
- Workplace closure (closure of one of several sites, or a relocation to a new site);
- Diminished requirement for employees to do work of a particular kind.
The procedure that an employer must follow will differ depending on whether the proposed redundancy relates to somebody in a ‘unique role’ (i.e. they are the only person undertaking that role), or relates to a number of employees carrying out the same role. If the latter, then the employer must use objective selection criteria to score the staff against each other, with the lowest scoring staff members selected for redundancy.
As part of a fair process, an employer must be able to demonstrate they have taken all reasonable steps to avoid making redundancies (for example by demonstrating they have already considered other measures such as reduced hours, ceasing overtime, pay reductions, offering other vacant roles to the staff affected etc).
If you are an employee, and you have more than two years’ continuous service with your employer, then you are entitled to a statutory redundancy payment. This is calculated by reference to your age and the length of your employment.