Redundancy – Frequently Asked Questions
Is there a minimum timescale to consult in small-scale redundancies?
There is no statutory fixed period of consultation required where you are making fewer than 20 employees redundant. However, check your employment contracts and any policies or agreements in case you have a contractual obligation to do so. You are, however, required to have meaningful individual consultation.
Why can’t I use last in first out?
You can, but it’s not usually going to be good practice and you should never use it on its own. Using this in isolation could be discriminatory. For example, if your newer workers are mostly younger, it could mean you treating them less favourably simply because of their age, even if you didn’t mean to.
Can I lay-off without pay to avoid redundancy?
A lay-off is a short-term solution for a temporary situation and is not the same as a permanent redundancy. There’s also no automatic right to lay-off your staff, especially without pay – you need to have (or get agreement for) lay-off provisions as part of the terms and conditions of your employment contracts.
Do I need to consult with a trade union in small-scale redundancy situations?
There is no statutory requirement for you to consult with a trade union for this reason. If you are a larger organisation but making fewer than 20 redundancies, double-check to see if your employee contracts, policies or union agreements require you to do so. Even if they don’t, it can be useful to include trade unions in the consultation process so that there is a good working understanding of the situation by everyone.
If I am closing my business, will the Government pay statutory payments to my employees?
Provided that the employees would have been entitled to statutory payments such as redundancy pay, notice pay, arrears of wages and outstanding holiday pay, the National Insurance fund can make statutory payments if your business is unable to. However, this is in very specific circumstances only and can be a complex area. To find out more about redundancies if your business is insolvent or closing, contact the Redundancy Payments Service Helpline: https://www.gov.uk/redundancy-payments-helpline
Does an employee have a right to be accompanied during consultation meetings in small-scale redundancy situations?
There is no statutory requirement to allow an employee to be accompanied for this reason, but double-check to see if your employee contracts, policies or union agreements require you to do so. It is usually good practice to allow employees to bring a work colleague or union representative into such meetings and can help increase staff confidence in your handling of the process.
If I sell my business, do I have to make my staff redundant?
No. If you are selling your business in most circumstances, your staff will transfer as part of the business. There are specific rules to protect employees from dismissal if the sole or principal reason for dismissal is the transfer itself.
Do zero hours contract workers qualify for redundancy pay?
In many cases, a zero hours contract refers to a genuinely causal relationship where an employer recruits a ‘worker’, rather than an ’employee’. Only ’employees’ are covered by redundancy rules. It is very important to assess the employment status of your staff accurately. A wrong decision here could give rise to a successful claim of unfair dismissal.
If an employee has less than two years’ service (and so wouldn’t qualify for a redundancy payment) is it still a redundancy?
Yes. While employees with less than two years’ service will not qualify for a statutory redundancy payment, the reason for terminating the contract will still be redundancy and a fair process should be followed.
Can a clause in a contract waive the right to a statutory redundancy payment?
No. A contract of employment cannot remove an employee’s right to a statutory redundancy payment or any other statutory right. However, a contractually enhanced redundancy pay scheme may improve on the statutory entitlement.
Can I make a part-time employee redundant?
Yes. However, you are statutorily required to make sure you do not treat your part-time employees less favourably than your full-time employees, so ensure your consultation process and selection criteria do not inadvertently penalise part-time employees.
An employee I have selected for redundancy has been part-time for the past 12 months but full-time for six years before that. How do I calculate redundancy pay?
There are different methods to calculate redundancy pay, depending on whether employees have regular or irregular hours of work, and if their pay varies with the amount of work they do. However, the calculation methods all focus on what the employee is currently receiving (or receiving on average) in terms of a ‘week’s pay’. Therefore, the fact that the employee had worked full-time originally is unlikely to affect the ‘week’s pay’ calculation. But, the fact that the employment was continuous means that it will count towards the part of the overall redundancy calculation that uses the employee’s length of service.
If you need basic assistance calculating your redundancy payments, visit https://www.gov.uk/calculate-your-redundancy-pay
For more complex calculation queries contact the Redundancy Payments Service Helpline https://www.gov.uk/redundancy-payments-helpline
Is a voluntary redundancy a resignation?
No. The fact that an employee volunteers for redundancy doesn’t mean the employment contract is terminated by mutual consent. Instead, voluntary redundancy is recognised as a redundancy dismissal.
If business needs change, how long do I have to wait before I can recruit again?
There is no fixed period of time following a redundancy exercise in which you need to avoid recruiting. If your business situation genuinely changes unexpectedly and a role you previously made redundant has to be re-created because you now need new staff, you can recruit as and when you like. Remember that any staff working their redundancy notice periods should be given the chance to trial these new roles first if they are potentially suitable and reasonable alternatives.
If I recruit again, do I have to offer a job to the person I made redundant?
If you’re recruiting into roles you’ve recently had to make redundant, you may wish to proactively recruit your original employees as there is a good chance their skills and experience will give your business efficiency savings and advantages that you may not get with completely new employees. However, you’re not statutorily obliged to do so.
Can an employee who is pregnant or on maternity leave be made redundant?
Yes. However, absences related to pregnancy or maternity leave should never negatively affect an employee’s selection criteria score. Similarly, it is automatically unfair to select an employee for redundancy because she is pregnant or on maternity leave.
Also, women on maternity leave who have been selected for redundancy have a statutory entitlement to be given priority above any other employee (even where others are more qualified or experienced) to be offered any suitable alternative vacancies.
Can an employee see other people’s selection scores?
Usually not. Individual selection scores are a matter between that employee and the employer. However, where there is concern over the scoring, it may be appropriate to anonymise your employees’ scores and subsequently share them – but only if it’s absolutely necessary and can be made genuinely anonymous.
We can help you strike the delicate balance between legal protection and minimising the impact a leaver may have on your team, to avoid a potentially negative experience.
Ensuring a smooth exit for leavers will give you peace of mind that your ex-employee is happy with the process and your business is protected. If you would like to discuss this or any other HR issues, please get in touch.
Contact us at hello@hrrevolution.co.uk or call 0203 538 5311.
