Redundancy Checklist

Posted by : | 11th Sep 2013 | Employment law for HR Directors

This redundancy checklist summarises the key issues that a business should be aware of when dealing with a redundancy situation.

When can a redundancy situation arise?

Redundancy encompasses three different types of situation:

  • Business closure.
  • Workplace closure.
  • Reduction of workforce.

Collective consultation

  • If a business is making 20 or more employees redundant over a period of 90 days or less, the business must:
    • inform and consult appropriate employee representatives.
    • notify the Department for Business, Innovation and Skills (BIS).
  • An employment tribunal can award up to 90 days’ pay for each employee if the business has not consulted adequately. The business can also be fined for failing to notify BIS.
  • The business should also ensure that it follows a fair procedure during the redundancy process (including consulting with employees properly) to minimise the possibility of claims for unfair dismissal.


Redundancy and unfair dismissal

  • Redundancy is a potentially fair reason for dismissal. However, a redundancy dismissal is likely to be unfair unless the business:
    • identifies an appropriate pool of employees for selection for redundancy.
    • consults with the individuals in the redundancy selection pool.
    • applies objective selection criteria to the employees in the redundancy selection pool.
    • considers suitable alternative employment where appropriate (subject to a trial period).
  • In certain circumstances, selecting an employee for redundancy will be automatically unfair. For example, selecting an employee:
    • for a reason connected to pregnancy;
    • because they refused to sign a working tie opt-out agreement; or
    • for reasons related to trade union membership or activities.

Alternatives to redundancy

  • At the start of a redundancy procedure, the business should consider whether it can avoid making compulsory redundancies or reduce the number of compulsory redundancies. For example, by:
    • suspending or restricting recruitment;
    • reducing or removing overtime opportunities;
    • not renewing contractors’ contracts; or
    • ceasing or reducing the use of agency workers.
  • If these steps are unavailable or insufficient, the business could also consider:
    • inviting potentially redundant employees to apply for suitable alternative vacancies;
    • inviting employees to volunteer for redundancy;
    • inviting employees to consider early retirement; or
    • temporarily laying off employees or reducing their hours.

Redundancy payments

  • Employees with at least two years continuous employment with the business at the point they are made redundant will be entitled to a statutory redundancy payment.
  • Some employees may also be entitled to an enhanced contractual redundancy payment, if their contract of employment or other documents provide for it.


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