Redundancy Common Pitfalls

Redundancy can hit employers unexpectedly and it is often a scary process to embark upon and challenging. A process of this kind naturally breeds contention and a sense of rejection amongst staff but a firm understanding of key principles can assist in a smooth process. Quite often this is the last thing on anyone’s mind when navigating an economic storm and in the pursuit of immediate cost saving, 

Employers should be aware of the common pitfalls when managing a redundancy process particularly for employees who have gained 2 years continuous service; which means any failure to follow the correct process could lead to findings of unfair dismissal.

Disingenuous redundancy  

Redundancy is often seen as the safe and easy option to dismiss expensive members of staff  however to rely on this ground the legal definition should be met, such as when there is either a business closure, a workplace closure or the employer’s diminished or diminishing requirements for employees to do work of a particular kind, according to section 139 of the Employment Rights Act 1996. 

Simply dismissing someone by way of redundancy to replace them with a more cost effective option does not necessarily meet the statutory definition. If the work has not ceased or diminished then this is not a redundancy situation but a case for dismissal based on some other substantial reason. 

A failure to consult those at risk of redundancy

A redundancy process is based on the principle of consulting those at risk. It is a cornerstone obligation  and a right of the employee. The consultation should be undertaken before any major decision has been taken and with the idea that the employee and their input could influence the decision. 

A failure to consult with staff will render any subsequent dismissal as unfair. 

Discrimination and consistency

Whatever criteria you use is going to be a pivotal part off whether the process is fair. Where possible any criteria applied should be objective and easily measurable rather than based on subjective areas that are open to interpretation. Employers should also be careful that any criteria does not fall foul of the Equality Act and be found to be discriminatory. A swathe of case law includes such scenarios as marking down employees with time taken off when being treated for cancer. 

In addition, any criteria used must also be consistently applied and applied in a transparent way. For example, giving a low score for performance related issues when the issues had never been previously addressed would not be a fair application. 

Predetermined outcome

Another critical aspect is to not enter into the process with a predetermined outcome. The entire point of a consultation process is to indicate that there could be a possible alternative with adequate consultation. In addition a failure to consider alternatives to dismissal would also render any process potentially unfair. 

If an employer could potentially utilise short time lay off clauses, and look at redeployment into other departments then this should certainly be explored. If an employer fails to do this then procedurally they are open to allegations that there was no legitimate intention to find ways to avoid the redundancy. 

Next Steps for Employers

If you are considering a redundancy process you should check your contractual obligations in terms of process, a failure to follow a contractual process could give rise to a breach of contract. In addition, a redundancy policy is advised so that a process is clearly mapped out for both employer and employee. Avoiding redundancy pitfalls for the most part can be avoided if all parties understand the principles.

If you would like advice and assistance about redundancy whether you are an employer or employee then please do not hesitate to get in touch by phone 01983 897003 or email to alison@realemploymentlawadvice.co.uk

We also have a DIY set of documents available for employers who may be navigating a redundancy situation you can purchase for £100 plus VAT here: Redundancy Documents for Employers

You may also find our podcast episodes on redundancy helpful:

Does a lack of an appeal hearing make a redundancy dismissal unfair?

Redundancy Process: Pools & Selection Criteria

Redundancy Process: Alternative Vacancies