Redundancy is a painful but necessary process in many circumstances and numerous organisations will sadly have to go through some level of redundancy process in the next few months. Done well, with a clear procedure and effective communication, it can avoid long-term pain and the business can move on healthier and leaner. Done badly, it can result in uncertainty, confusion and potentially costly visits to the tribunal.

We have asked colleagues in the employment law team to highlight what they think is key to managing a redundancy programme well.

Do I need to prepare anything in advance of making people redundant?

Preparation and planning are key to the process; without these, neither the employer nor the potentially redundant employee(s) have any clarity or direction.

Matthew Gregson, department head, comments:

“Embarking on a redundancy programme should never be a ‘knee jerk’ reaction to an economic crisis. Whilst the temptation to reduce headcount may be strong, it is crucial that any redundancy process is planned and rooted in a sound business case. My advice is that employers should ensure the following: you have a clear and easy to follow redundancy policy; you have documented a business case for why redundancies have to be made; there is a clear timetable of the process in place; a robust redundancy process has been laid down; and there are sufficiently skilled staff to handle the process, who have also been given the time to focus on the redundancy programme. While the process may still be an upsetting one for many, these steps will bring clarity for all concerned.”

Are voluntary redundancies compulsory?

There is no obligation to offer voluntary redundancies in any situation where employees are going to be made redundant.

Alice Kinder, solicitor in our team, comments:

“It is a popular misconception that whenever redundancies are planned, an employer must offer or accept voluntary redundancies before anything else. Whilst it is common practice to ask for voluntary redundancies where a reduction in headcount is needed, it can cause some issues. Employers often find that it is the employees they desperately want to keep in the business who put themselves forward for voluntary redundancies and not the ones they would like to move on! My advice would be to assess the impact and effect of offering voluntary redundancies prior to making that step, and if you are inviting people to volunteer for redundancies, be clear that their offer to leave may not be accepted. Finally, don’t forget that it is unlikely many people will take voluntary redundancy unless the package is an enhanced and attractive one.”

Can employees on furlough be made redundant first?

Whilst it is increasingly the case that employers will be looking to make roles redundant where the relevant employee is on furlough, this is not a green light to bypass a fair redundancy process.

Doug Mullen, senior associate in our team, comments:

“Current Government guidance notes that whilst employees on furlough can be made redundant, employers must still follow a fair redundancy procedure, which involves consultation, identifying the pool for redundancy, applying selection criteria, etc. Failure to do so could render the redundancy an unfair dismissal. I would remind employers that you can (and must) consult with employees on furlough - this will not break the furlough agreement that they carry out no work during furlough.”

Can I have a redundancy pool of one person because I only want to make that person redundant?

Whilst a pool of one employee is not unfair in all circumstances, employers must always ensure that their pool is wide enough and includes all relevant employees.

Sarah Harnett, solicitor in the team, comments:

“Reducing the number of employees in a redundancy pool can be an attractive prospect for employers; it makes consultation easier and eases the guilt of having to ‘choose’ between employees. However, the risk that the redundancy dismissal is unfair is high if the pool is limited to just one or two employees where there should have been more. The redundancy could be perceived as merely an excuse to get rid of a particular employee. My view is that employers should always approach the selection process by asking the question ‘what type of work(s) is diminishing, and which employees carry out that work?’ They should also assess whether there are any interchangeable skills and whether there are employees on different sites who should be considered.”

I won’t consider bumping because it seems harsh

Bumping is the process of moving a potentially redundant employee (A) into another role and removing the employee (B) who is currently in that role. Employee B would then be dismissed by reason of redundancy.

Faye Rush, senior associate in the team, says:

“There is no obligation on employers to bump employees, but case law has found that bumping should be considered as an alternative during the redundancy process. Failure to do so in some cases could mean that the redundancy is unfair. It does not make any difference as to whether the potentially redundant employee has mentioned being willing to be moved to another role, the employer should still consider the possibility and if appropriate discuss it with the employee. It is often seen as an unpopular practice and there is always the risk that the ‘bumped’ employee could claim unfair dismissal. However, I would argue that for employers it can be an effective way of keeping key employees whose skills or experience cannot be utilised at the specific time for financial reasons within the business.”

We use “attitude” as one of our selection criteria

Selection criteria for redundancy must be objective in all circumstances.

Katherine Sinclair, senior associate in the team, writes:

“The key issue here is that selection criteria must be objective; attendance figures, appraisal results, performance indicators, length of service are all objective. My advice is that assessing whether an employee has the right ‘attitude’ or ‘is one of us’ should be avoided as it could render the redundancy unfair. Furthermore, care must be taken when applying seemingly objective criteria. Certain periods of absence, such as for pregnancy or any family-friendly leave, must be discounted when applying attendance (for example) as the absence could be due to a disability. Although the ‘last in first out’ principle has long been considered as a suitable criterion, more recently, tribunals have not looked on it so kindly due to the potential for indirect age discrimination.”

An employee on maternity leave is protected from redundancy, so I must have them back after their leave

An employee on maternity leave can be made redundant although there are key issues that an employer must consider.

Hannah Bollard, solicitor in the team, comments:

“Clearly, if an employer makes an employee who is on maternity leave redundant because of her pregnancy and absence, this will be unfair and discriminatory. However, an employer is entitled to place an employee, who is absent on maternity leave, in the pool of potential candidates for redundancy if their role is redundant for whatever reason, or if they share the skill sets of other potentially redundant roles. My advice is that an employer must, however, be wary of the following: firstly, any selection criteria applied must, as noted above, not discriminate on the grounds of their maternity leave or pregnancy. Secondly, an employee on either ordinary or additional maternity leave is entitled to be offered any suitable alternative role with their employer (or any associated employer) and they are given priority over other potential redundant employees who are not on maternity leave.”

Does the duty to consult just mean to inform as I am not asking for any input back?

The duty to consult is indeed that - an employer must consult with the affected employees and ask for input in the process.

Jackie Morris, associate in the team, comments:

“The word ‘consult’ is not in itself redundant in this process. At regular intervals during the redundancy programme, employers should be asking affected employees for their input, suggestions and comments. Employers who see the process as one of merely the imparting of information, risk claims for unfair dismissal. Employers are not required to activate employees’ suggestions or comments, but they are required to reasonably consider them. I would suggest that examples of when an employer should be inviting employees’ input are as follows: at the initial meeting when the threat of redundancies are announced, employees should be asked for any suggestions as to avoid redundancies; when the selection criteria are announced, employees or their representatives should be asked for comments and suggestions; and employees who are scored in accordance with the selection criterion should be asked for their comments on their scores, along with any issues they might have as to how they have been applied.”

For more information

If you would like further information on redundancies, please contact our employment and pensions team.