Employer Guides – Dealing with Redundancy


No manager or business owner wants to face the reality of redundancy, but there are times when there is simply no alternative.

Companies face extinction if they can’t balance their books – particularly in the current economic climate. Because the biggest cost incurred by most companies is labour, redundancies are an unavoidable part of modern business.

If you need to cut the costs of your business, or you’re the individual in an organisation responsible for a programme of redundancies, you will need to avail yourself of the legal requirements involved. By seeking advice from employment solicitors and adhering to the regulations, you can ensure legal compliance and minimise costs.

Seek redundancy advice before selecting employees

It may sound rather obvious, but your organisation must have a compelling reason to announce redundancies. From the moment you start to consider this course of action, you should seek redundancy advice from legal experts.

The method you choose for selecting employees for redundancy has to be fair and transparent. Selecting people on the grounds of age, sex, race and religion is illegal, potentially leading to strong cases for unfair dismissal and discrimination. Employment lawyers will work with you to formulate a redundancy process that is wholly evidence based.

This will include factors such as performance and disciplinary issues. However, if your organisation has already agreed on a redundancy process with a trades union, it should be followed. Also, if a redundancy procedure is outlined in an employment contract it must be adhered to.

Redundancy consultations

If you are planning to make fewer than 20 people redundant, you will need to consult with those affected before a decision is made. Failure to do this will usually constitute unfair dismissal. This consultation should give your employee an opportunity to discuss the timescale involved, as well as providing mitigating information about why they shouldn’t be made redundant.

In some rare cases, this consultation may result in an agreement on changes to pay and working practices that could stop the redundancy from taking place.

If 20 or more redundancies are planned, a more formal procedure is required. A relevant trade union must be consulted before any decisions are made. If there is no such trades union, employees must be given the opportunity to appoint representatives who will consult with you on behalf of your workforce. If you don’t follow this procedure, everyone made redundant may have recourse to an unfair dismissal claim.

Staying on the right side of the law

You are not allowed to discriminate on the grounds of sex, religion, sexual orientation, race or religion when it comes to selecting people for redundancy. It is also against the law to select people based on a pregnancy, or because they work on a part-time basis.

However, you can, in certain circumstances, use length of service as a criterion for redundancy selection. However, you should seek advice from employment lawyers before including length of service in your selection process.

If you were to announce that anyone who has worked in your organisation for less than 6 months is to be made redundant, that may include the youngest members of your time – exposing you to allegations of discrimination based on age.

Redundancy should always be a last resort, but it can be inevitable when the alternative is a failed business. By managing the process according to the law, and consulting with employment solicitors  at every stage, you should be able to avoid employment tribunals and minimise the disruption to your organisation.