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.