Redundancy templates toolkit

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Redundancy

Redundancy occurs when an employer decides to terminate an employee's contract because the job position is no longer necessary or the business undergoes a significant restructuring. Redundancy is not a dismissal due to the employee's performance or conduct; rather, it is a result of changes in the business environment.

Key points about redundancy include:

1. Business Changes: Redundancy may occur due to various reasons, such as technological advancements, organisational restructuring, mergers, a decline in business, or the closure of a particular department or location.

2. No Fault of the Employee: Redundancy is not the fault of the employee. It is a situation where the job role itself is no longer required, and the decision is typically made based on the needs of the business.

3. Fair and Transparent Procedures: Employers are usually required to follow fair and transparent procedures when implementing redundancies. This may include consultation with employees, exploring alternatives to redundancy, providing notice, and offering suitable redeployment opportunities within the organisation.

4. Consultation: Employers are often obligated to consult with employees and, in some cases, with employee representatives or trade unions before making a decision on redundancy. This allows for open communication and the exploration of potential alternatives.

5. Severance Pay and Entitlements: In many jurisdictions, employees made redundant may be entitled to severance pay or redundancy pay. The amount often depends on factors such as the length of service and local employment laws.

6. Redundancy Selection Criteria: If multiple employees hold similar roles, employers may establish fair and non-discriminatory criteria for selecting employees for redundancy. Common criteria include skills, performance, and length of service.

It's important for employers to handle redundancy situations with sensitivity and in compliance with employment laws. Employees affected by redundancy may have rights to compensation, notice periods, or support for finding alternative employment. Seeking legal advice and following established procedures can help both employers and employees navigate redundancy situations.

Redundancy templates are essential for managing a low-risk, compliant Redundancy process.

Key Redundancy Case Law

Navigating Redundancy processes correctly is crucial to help you avoid any problems (which can be costly in terms of time, money and reputation).

Recent UK case law has highlighted key aspects of good Redundancy management. Knowing how courts have handled claims can help you assess whether your proposed actions are likely to be seen as reasonable.

Here are some notable rulings and their implications:

Consultation

• De Bank Haycocks v ADP RPO UK Limited (2020):

  Facts: De Bank Haycocks (DBH) was not provided with his selection scores or consulted adequately before the redundancy decision was made.

  Outcome: Although the procedural error was rectified during the appeal, the Employment Appeal Tribunal (EAT) found the dismissal unfair because the initial consultation was insufficient. The EAT emphasised that consultation must occur when proposals are still at a formative stage to allow employees to influence the process and potentially avoid dismissal.

  Key takeway: This case underscores the importance of meaningful consultation at the formative stage of the redundancy process.

• Gwynedd Council v Barratt & Hughes (2020):

  Facts: This case involved a restructuring process where teachers were required to apply for new roles in the restructured school.

  Outcome: The EAT ruled that the council failed to follow a fair redundancy process as there was no consultation on the redundancy decision itself. Instead, the council merely consulted on the new roles, which did not constitute a genuine redundancy consultation.

  Key takeaway: This case highlights the necessity of consulting on the redundancy decision and not just on new job roles.

• Colquhoun v Telent Technology Services Ltd (2021):

  Outcome: The EAT upheld an unfair dismissal claim because the employer failed to consult adequately with the affected employees. The tribunal found that while the employer did hold consultations, they were insufficient in providing meaningful dialogue and consideration of the employees' input.

  Key takeaway: This case reinforces the requirement for a thorough and meaningful consultation process, allowing employees to contribute effectively to the discussion.

• Koehler v Primark Stores Ltd (2023):

  Facts: In this case, the employer failed to consult with an employee on maternity leave regarding her redundancy.

  Outcome: The EAT ruled that the dismissal was unfair as the employee was not given the opportunity to participate in the consultation process.

  Key takeaway: This decision highlights the importance of including all affected employees in the consultation process, regardless of their leave status.

Process / Selection

• Nicholls v Rockwell Automation Ltd:

  Facts: This case examined the objectivity of redundancy selection criteria.

  Outcome: The Employment Tribunal initially ruled that Mr. Nicholls's dismissal was unfair due to subjective scoring in the selection process. However, on appeal, the Employment Appeal Tribunal (EAT) emphasised that not all aspects of redundancy criteria need to be objectively verifiable.

Key takeaway: The decision underscored the importance of overall reasonableness in redundancy selection criteria, supporting the use of some subjective elements if they are reasonably applied.

• Packman (t/a Packman Lucas Associates) v Fauchon:

  Facts: In this case, the EAT clarified that a reduction in working hours could constitute a redundancy situation. Ms. Fauchon was dismissed after refusing to accept significantly reduced hours due to decreased business needs. 

  Outcome: The EAT held that her dismissal was due to redundancy, aligning with the legislation that focuses on the reduction in the need for employees to perform specific work, rather than the headcount alone.

• Berkeley Catering Ltd v Jackson:

  Facts: This case involved the absorption of a Managing Director’s role by the owner of the company.

  Outcome: The EAT ruled that there was a genuine redundancy situation as the need for a separate Managing Director had diminished. However, it remitted the case to consider whether the redundancy procedure was fair.

  Key takeaway: Even if a redundancy is genuine, the fairness of the process is critical.

• Southport Theatre and Convention Centre Employees v Bliss Space:

  Facts: During the COVID-19 pandemic, Bliss Space closed without prior consultation with employees, leading to a redundancy claim.

  Outcome: The Employment Tribunal found that Bliss Space had failed to meet its consultation obligations under the Trade Union and Labour Relations (Consolidation) Act 1992, awarding a protective payment to the affected employees.

  Key takeaway: This case reinforced the importance of employers fulfilling their consultation duties, even in challenging circumstances like a pandemic.

• Thomas v BNP Paribas Real Estate:

  Facts: Mr. Thomas claimed unfair dismissal during a redundancy process.

  Outcome: The Tribunal found that BNP Paribas had not followed a fair process, particularly in failing to offer suitable alternative employment to Mr. Thomas, which was available within the company.

  Key takeaway: This decision emphasises the necessity for employers to consider and offer suitable alternative positions during redundancy consultations to avoid unfair dismissal claims.

Redundancy workflow

Here we show you which resources to use to effectively oversee redundancies, taking into account the different decisions and directions that are likely / possible.

Following this flowchart will ensure that you factor in all eventualities, follow legal / code of conduct or best practice processes, communicate effectively, and reduce the risk of things going wrong.

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