Redundancy: Employers' Rights and Responsibilities

By: J.A.J Aaronson - Updated: 12 Apr 2012 | *Discuss

 

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The scale and speed of the current downturn has caught many by surprise. Many perfectly viable and profitable companies have struck down by a sudden contraction in credit, a collapse further up their supply chain, a new-found paucity of custom, or any number of other uncontrollable factors. In an effort to save money and stay in business, many employers are contemplating making staff redundant.

To begin with, it should be remembered that redundancies should be avoided wherever possible. It is generally a poor business idea to lay off experienced staff in an effort to cut costs. However, where you have no alternative but to make people redundant, you must ensure that you fully understand your responsibilities as an employer.

Redundancies fall into one of two categories: those in which fewer than 20 employees are being laid off, and those in which 20 or more are to lose their jobs. Your responsibilities differ depending on which category is applicable.

Collective redundancy

In these cases you have a statutory responsibility to consult with an "appropriate representative" of the employees in question; this will generally be a trade union representative. The consultation period must begin between 30 and 90 days before the date of the proposed redundancies. During the consultation you should explain why you need to make redundancies, and come up with a mutually acceptable method of redundancy. This will include details of notice periods and so on.

You also have a statutory responsibility to inform the Department for Business Innovation and Skills (BIS) if you intend to make 20 or more people redundant.

Redundancy payments

Employees' redundancy settlements are linked to their eligibility for Statutory Redundancy Pay. Essentially, in order to qualify the individual must have worked at the company for at least two years, and must not have been offered a different job with your company or with a company that is taking over your business.

Redundancy pay is calculated as follows:

• Employee under 22 years old: 0.5 weeks' pay x the number of years' service
• Employee 22 - 41 years old: 1 weeks' pay x the number of years' service
• Employee 41 or older: 1.5 weeks' pay x the number of years' service

Redundancy is a difficult process for all concerned. If you are unsure about your legal responsibilities it is vital that you seek appropriate advice before taking any action. The BIS helpline will be able to give you information specific to your business.

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Negotiating a Redundancy Package

Dusting Yourself Off: Life After Redundancy

Redundancy Selection, Notice Periods and Consultation

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