Redundancy and Business Reorganisation

Making redundancies is a difficult time for any business, particularly given that you might face claims in the Employment Tribunal if you get it wrong. 

Redundancy is a legal term for a type of dismissal and its statutory definition encompasses three different situations; business closure, workplace closure and a reduction of the workforce. Therefore, this means that either the whole company is closing down, your place of work is closing down or that your employer no longer needs you to carry out the role that you were hired for.

Employees who are dismissed as a result of redundancy may be entitled to a statutory redundancy payment and may also be able to challenge their termination of employment as an unfair dismissal. Even in cases where the redundancy itself is a fair reason for dismissal, Tribunals will look at how reasonable this decision was.

A redundancy may also be unfair if you have failed to follow a fair procedure.  A fair procedure depends on the number of redundancies being made (more than 20 redundancies are considered 'collective redundancies').  However, the procedure will always require you to consult with your employees.

Although some employees may be entitled to statutory redundancy payment, all employees facing redundancy are entitled to notice pay (which may be set out in their contract, or will depend on their length of service) and outstanding holiday pay. Statutory redundancy payment is available to employees with at least two years’ continuous employment.

Our employment team can advise on all aspects of redundancy procedures and redundancy payments, and can advise in relation to any unfair dismissal claim which may arise as a result.