Redundancy is a potentially fair reason for dismissal, but may involve the employer having to make a statutory redundancy payment to the employee, the amount of which is calculated by reference to the employee’s age, the number of years they have worked the employer and their weekly salary.
The statutory definition of redundancy is contained within section 139(1) of the Employment Rights Act 1996 and is as follows:
For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to:
the fact that his employer has ceased or intends to cease:
- to carry on the business for the purpose of which the employee was employed by him; or
- to carry on that business in the place where the employee was so employed; or
the fact that the requirements of that business:
- for employees to carry out work of a particular kind;or
- for employees to carry out work of a particular kind in the place where the employee was employed by the employer
- have ceased or diminished or are expected to cease or diminish
Essentially, therefore, in order for redundancy to apply, the employer must require less employees, or expect to do so.
To avoid a claim of unfair dismissal by any employees with the necessary continuous employment, it will also be necessary for the employer to follow a fair procedure and the decision to dismiss that particular employee must be one of a range of reasonable responses available to a reasonable employer.
Generally, an employer considering making employees redundant will not be considered to be acting reasonably unless they warn and consult any employees affected or their representatives, adopt a fair basis on which to select for redundancy and take such steps as may be reasonable to avoid or minimise redundancy.
In addition, where the employer intends to dismiss as redundant 20 or more employees at one establishment, they are obliged to consult with the employees collectively and notify the Department for Business, Innovation and Skills, both within specific deadlines.
If you require advice on a planned redundancy, the procedure to be undertaken or your collective consultation and notification obligations, please contact Albert Bargery on 01296 318500.