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Redundancy

Things You Need to Know About Redundancy

Karen Penfold, Head of HR at CODE, outlines the right way to go about making redundancies

Redundancy is one of the five fair reasons for dismissal but often it is used in the wrong way or for the wrong purpose.

Redundancy can be used when the business needs fewer employees due to lower services demand, restructuring, relocation or closure. The CODE HR team regularly provide support to members who are having to consider redundancy. This is often in relation to tendering, restructuring and cost saving.

Many employers are unsure of the correct process to follow when making redundancies, which can become more complicated when TUPE (Transfer of Undertaking for Protection of Employees) is involved. Redundancy can be particularly complicated when linked to TUPE so it is always important to seek expert advice.

The Code Total HR team have been supporting many members recently where redundancies are required, let’s take a look at some important things to remember if you are in the same situation…

When would redundancy be unfair?
The following circumstances could make the dismissal unfair:

  • Flawed selection process
  • No consultation or warning prior to notice of dismissal
  • No attempt to provide alternative employment

It is important to ensure that roles and team members at risk are identified and selected fairly. This would normally be done based on the type of work that employees carry out. By singling any team members out, you are at risk of a flawed selection process.

Consultation process
All employees at risk of redundancy are entitled to a consultation process. During this process you should discuss with the team member why they are at risk of redundancy, how any selection criteria will be applied and any alternatives to redundancy. It is important to remember to follow a consultation process to minimise your risk of an employment tribunal claim.

There is a different consultation protocol for 20 or more redundancies at the same time but, as most dental practices won’t be operating to these figures, we will focus on a typical consultation process. This would normally involve a minimum of three stages:

  • Stage 1 – Initial meeting with employees to make them aware that a potential redundancy situation has arisen
  • Stage 2 – Consultation meetings
  • Stage 3 – Confirmation of redundancies, review of redeployment options and any assistance the employer can provide

Selection criteria
During the consultation process, any selection criteria to identify redundancies should be agreed and then applied objectively and fairly. Selection criteria often used includes, skills and knowledge, qualifications and disciplinary records. It is important that any selection criteria does not discriminate against employees. We recommend involving more than one person in the selection process to reduce risk of bias and ensure thorough documentation.

Redundancy pay
Following a consultation process and implementation of selection criteria, only employees who have been continuously employed for a period of not less than two years have a right to redundancy pay. The current maximum statutory redundancy payment is capped at £15,750.00, as length of service is capped at 20 years. Redundancy pay under £30,000 is not taxable.

Redundancy pay is calculated on the following basis:

  • Half a week’s pay for each full year the employee was under 22
  • One week’s pay for each full year the employee was 22 or older, but under 41
  • One and half week’s pay for each full year the employee was 41 or older

Suitable alternative employment
It is particularly important to remember to review any suitable alternative employment for team members affected by redundancy to avoid a potential unfair dismissal claim. Do not assume that the employee may not be interested in a role because of a reduction in salary. A four-week trial period for new roles can be agreed between both parties.

Reasonable time off
Employees who have two years continuous employment and have been given notice of dismissal due to redundancy, are entitled to reasonable paid time off to look for new employment or to arrange training for future employment. There is no definition of reasonable and an employment tribunal can give awards for failure to adhere to this.

Points to remember
  • It can be useful to ask for volunteers for redundancy. Some employers may offer an enhanced redundancy payment as an incentive
  • All employees will be entitled to a notice period as per the terms of their employment contract, which can be paid in lieu of notice
  • Employees who are on maternity leave receive extra protection when it comes to a redundancy process. Employers are obliged to offer any suitable alternative employment to them as a priority
  • All employees will have the right of appeal to any redundancy decision issued. The appeal should be held by someone who is independent
  • It is important to remember during a redundancy process to manage and support any team members at risk of redundancy, as well as the rest of the team. Redundancies are very emotive and stressful for everyone involved.

As always, iComply users will be able to utilise our Redundancy Policy and Procedure (M 233-RDN).

Our Code Total HR members will receive additional support with bespoke communication to employees.

For further information regarding redundancy, please register for our free webinar on 5 September 2019.

 

 

A well-managed team is the backbone of a successful practice. Take the stress and doubt out of dealing with HR and employment law and focus on growing your business with CODE Total HR. We will look after your HR as well as you take care of your patients. Join the CODE Total HR and Employment Law service before the 30th September and get 2 months free subscription, saving over £300!

For more information on CODE’s Total HR service visit www.codeuk.com/hr or call the team on 01409 254 416