Get the redundancy process right to avoid an unfair dismissal claim

A redundancy situation, or losing an employee in the broader sense, is generally something that you want to avoid. But that doesn’t mean it doesn’t happen.

In some instances, you might even mishandle a redundancy or rush it through. This may be because you need to make cutbacks or want to get a disruptive employee out of your business.

But when the dust settles and you review your redundancy process, you might find that there were some mistakes along the way. And, if the dismissed employee feels that the process didn’t follow proper procedures, you could have an unfair dismissal claim on your hands.

What is unfair dismissal?

Under the Unfair Dismissals Acts 1977-2015, a dismissal is considered unfair if you dismiss an employee for:

• Membership or proposed membership of a trade union or engaging in trade union activities.
• Religious or political opinions.
• Involvement in legal proceedings against you.
• Race, colour, sexual orientation, age, or membership of the Traveller community.
• Pregnancy, giving birth, breastfeeding, or any matters connected with pregnancy or birth.
• Utilising their legal rights to maternity leave, adoptive leave, paternity leave, carer’s leave, parental leave, or force majeure leave.
• Unfair selection for redundancy.
• Making a protected disclosure under the Protected Disclosures Act 2014.

The need for a genuine redundancy situation

For any employee to be made redundant, you need a genuine redundancy situation to exist. You need to have evidence of this situation before beginning a redundancy process.

Redundancies are often a factor of:

• Business closure.
• Financial difficulties.
• Technical advances e.g., new technologies.
• Demand for the employer’s goods or services decreasing and causing a shortage of work.
  

Once you’ve established a genuine redundancy situation, you must make sure that:

• The employee had the benefit of fair procedures before dismissal.
• The selection process was fair.

Unfair dismissal claims tend to arise from employees who question these procedural steps.

So, to prove a genuine redundancy situation exists, you’ll need supporting evidence to back up your argument. You’ll also need to make sure your redundancy process follows fair procedures before making an employee redundant.

This underlines the benefit of having a reliable redundancy procedure in place. Your policy should outline the notification, consultation, and selection process that any final redundancy decisions will be based on.

What is a fair selection process?

Fair selection with regard to redundancy involves a situation where several employees work the same or similar jobs. Fair selection is necessary to maintain transparency and fairness.

You should make sure that the selection for redundancy is:

• Not due to one of the automatic unfair reasons for dismissal.
• Not in violation of an agreed selection process or past custom and practice in respect of selection.

If you have no procedure in place, the general rules of fairness and reasonability apply.

If no redundancy policy or custom and practice exists in respect of selection, you should seek to agree the selection method, and any associated criteria, before starting the redundancy consultation process.

By securing agreement to the selection method, you reduce the chances of undertaking an unfair redundancy selection process.

An example of a selection method is ‘last in first out’ (LIFO) or a skills selection matrix. The best method to choose will depend on the needs of your business and the role you’re making redundant.

What does a fair redundancy process consist of?

A redundancy process that satisfies the “reasonableness” test set out in Unfair Dismissal legislation requires that you go through a redundancy consultation process.

This involves conducting a number of consultation meetings with the affected employees that look to make sure they:

• Understand the rationale behind the potential redundancy situation.
• Agree to the method for selection.
• Have an opportunity to explore alternatives to redundancy.

To make sure you carry out a fair redundancy process, you should also give employees the option to have representation at these meetings.

Only after these meetings should you confirm to the employee that they’re being made redundant. You should confirm this with a termination letter outlining their entitlements.

Need help with your redundancy process?

Try BrightHR’s redundancy navigator. It’s a confidential online tool that leads you safely through each step of the redundancy process.

You can check off tasks as you go, access time-saving letter templates, and download regular reports to track your progress and help you avoid costly legal mistakes.

If you’re a BrightHR customer, you can start using the redundancy navigator tool straight away. Just log in to your account to get started.

Not a BrightHR customer? No problem. Book your free demo today to see the redundancy navigator in action.