It is a well known fact that “Redundancy” ranks as one of the most stressful life experiences for many people. It is something we all dread and in most circumstances, an employee’s worst nightmare. The reality is that many of us are made redundant each year and with the current economic climate, the number of redundancies are still on the increase. In fact, the Chartered Institute of Personnel and Development forecast that more than a million people will have lost their jobs during the course of the recession.
It is essential for employees to know their basic rights when it comes to redundancy, and to ensure their employers act in a lawful manner by following the correct statutory redundancy procedure. Without being too technical and boring you with sections of the Employment Rights Act 1996 (the “Act”), in a nutshell the employer needs to show that there was a genuine reason for redundancy and that the dismissal was handled fairly. In summary, the Act contains three reasons for redundancy:
- The closure of the business as a whole;
- The closure of the workplace (e.g. one of the offices or factories); and
- Less need for employees.
Steps your employer must take
- Planning: Your employer must identify the necessity of making redundancies and make preliminary plans of when, where and how these should be made.
- Duty to consult appropriate representatives: If your employers are making 20 or more employees redundant, they have a duty to consult with your trade union and the DTI.
- Selecting the group/unit: Your employer must decide on the area where employees will be made redundant, the number of employees to be made redundant, invite volunteers and consider alternatives within the organisation.
- Selecting the individuals: Once your employers have identified this area, they must then select which employees should be made redundant. Commonly, a ‘last in, first out’ policy is used.
- Individual consultation: At this stage your employer should not dismiss, but should explain to the employee that there is a redundancy situation and that the employee’s job is at risk.
- Sending out dismissal notices: Your employer should not send out these notices until the consultation has taken place.
- Appeal system: Your employer should have a system in place for you to appeal against selection.
If the correct procedure isn’t followed or you think the decision to dismiss you for redundancy was unfair, you could bring one or more claims on the following bases:
- Wrongful dismissal. You could claim this for breach of contractual notice provisions.
- Unfair dismissal. You could seek reinstatement, re-engagement or compensation (including a statutory redundancy payment), although you usually need to have been employed for at least a year in order to claim.
Pre-conditions for a redundancy payment
Even if the correct procedure has been followed by your employer and you were dismissed fairly, you may be entitled to a redundancy payment if you:
- were an employee;
- were continuously employed for a period of two years;
- were dismissed by reason of redundancy;
- were to bring the claim within 6 months;
- do not fall within certain excluded categories; and
- have not unreasonably refused alternative employment.
It is very important for us all to be aware of these pre-conditions. If you do not fulfil the criteria, you will not be entitled to claim redundancy and there is no point in attempting to sue your employer (even on a no win, no fee!).