What is Redundancy?
Redundancy is a form of dismissal which occurs because of two main reasons. The first being the fact that the employer has ceased or intends to cease to carry on business, and the second being because the requirements of the employer’s business for employees to carry out work of a particular kind have ceased or diminished or are expected to cease or diminish.
This means that dismissal because a business ceases to trade will be on the basis of redundancy. A dismissal because the employer needs fewer people to carry out a particular job will also be on the basis of redundancy.
A Fair Reason to Dismiss an Employee
Redundancy is one of a number of potentially fair reasons for dismissing an employee. When an employee has two years’ service, they have the right to not be unfairly dismissed. If the reason for the dismissal is a redundancy, then the dismissal is potentially fair. Whether or not it is fair will depend upon the extent to which the employer acted reasonably.
There are many aspects to the requirement to act reasonably. Generally an employer will:
- Be expected to have given some sort of warning of the possibility of redundancy;
- Have considered the pool from which the candidates for dismissal by reason of redundancy will come from;
- Have chosen appropriate criteria for selecting the individual employee who is to be dismissed by reason of redundancy; and
- Have looked at ways of avoiding redundancy.
The actual procedures, processes and time-frames depend upon whether or not more than 19 employees are to be dismissed at one establishment within a period of 90 days or less. If so, the rules on collective redundancies apply and there are special time limits and there is a requirement to notify the Secretary of State. If not, then the law is less prescriptive, and simply requires that the employer acts reasonably in the consultation which they carry out.
Rights of the Employee
Where an employee is selected for dismissal by reason of redundancy and they have been employed for two years or more, they will be entitled to a statutory redundancy payment. Some employers provide for payment of sums in excess of the statutory redundancy payment.
Where an employee is to be dismissed, they will be entitled to work their notice period (subject to the terms of the Contact of Employment) and will be entitled to a payment in respect of accrued holiday pay at the point of dismissal.
How can Turcan Connell help you?
We can advise you on your right to take a case to the Employment Tribunal, and can conduct that case for you, representing you in the tribunal proceedings. Contact one of our Employment Law specialists today.