What is a Fair Redundancy Procedure? Guidance for Employees

If your employer is considering redundancies, they must follow a fair procedure.

If your employer gets the procedure wrong, you could claim compensation for unfair dismissal. Alternatively, you may be able to agree a settlement agreement with your employer as a way to avoid a tribunal claim.

If your employer is making more than 20 redundancies, there is a prescribe procedure that they must follow. The procedure is set out in this government guidance.

If your employer is making fewer than 20 redundancies, there is more flexibility. However, they must still show that they have acted fairly.

Here are 4 questions you should ask to determine whether your employer has followed a fair redundancy procedure.

1. Has Your Employer Consulted with You?

Your employer has a legal obligation to inform you of potential redundancies and to consult meaningfully with you and any other affected employees.

They must keep an open mind during consultations and genuinely listen to you and other employees. This is because you may come up with ideas they haven’t previously considered.

What should your employer do during the consultation process?

Your employer should do 7 things during the consultation process:

  1. Inform you of the situation and why redundancy is proposed, including consideration of whether there are any alternatives to redundancy
  2. Tell you who is in the pool of employees at risk
  3. Provide information on the consultation period and timetable
  4. Consult with you about the criteria for the selection process
  5. Consult about any suitable alternative roles within the organisation
  6. Listen to your concerns about the process or any other relevant matters
  7. Allow you time off to arrange training and look for new employment.

When should your employer consult?

Consultation for redundancy should take place when the proposals are still at an early stage. You should receive enough information that you can make representations as to why you shouldn’t be dismissed.

How long should the consultation period be?

If there are fewer than 20 people being made redundant, there’s no minimum period of consultation.

However, an employer would be expected to have at least 2 consultation meetings with you before making a decision.

2. Is there a reasonable selection pool?

If your employer is reducing employee numbers, they will need to identify a pool of people at risk of redundancy.

In some circumstances, this may be a pool of only one employee.

If your employer has told you that you will be made redundant when they haven’t considered a proper selection pool, this is likely to be unfair.

3. Is your employer using reasonable criteria?

Your employer should draw up fair and objective selection criteria.

As far as possible, the criteria should not be dependent on the opinion of a the person making the decision. Instead, the scoring should be capable of being objectively checked.

Examples of objective selection criteria are:

  • attendance
  • disciplinary record
  • performance
  • skills
  • qualifications
  • length of service

The employer may apply different weight to each of these criteria.

Some employers have a policy of ‘Last In First Out’. If this is the only criterion, it is likely to be unfair because it may indirectly discriminate against younger people.

An employer is allowed to dismiss someone whose role is not redundant and replace them with someone whose role is redundant. This is known as ‘bumping’.

Your employer should score you and other members of staff who are at risk of redundancy. Unfortunately, you’re not allowed to see other people’s scores because that would breach data protection law. However, your employer is allowed to show you average scores.

4. Have you been considered for any suitable alternative employment?

Your employer should take reasonable steps to determine whether there is alternative employment within the company or any group companies.

An employee on maternity leave should be given priority to other staff if there is any suitable alternative roles.

Making a decision

Once your employer has gone through the above procedure, they are allowed to make a decision whether to dismiss you.

If they do decide to dismiss you, they must pay you your statutory redundancy payment and any contractual entitlements, such as

  • your notice,
  • holiday pay that has accrued up to the termination date
  • any enhanced redundancy entitlement

However, you wouldn’t be entitled to any more than that.

Accepting a settlement agreement instead of redundancy

Managing a redundancy procedure can be time consuming for an employer.

In order to avoid the burden of going through the procedure, your employer may offer you a settlement agreement instead. Usually, this means that you will receive more money in exchange for giving up your rights to claim unfair dismissal.

You will need to weigh up the risks and the incentives when considering whether to accept a settlement agreement instead of going through a redundancy procedure. However, it is often a better option, both for you and your employer.

If you’ve received an offer of a settlement agreement as an alternative to redundancy, you will need to make sure you receive legal advice on it.

We advise clients throughout the UK. We provide clear and prompt advice on a confidential basis.

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