Redundancy and restructuring: How to treat your workforce fairly

By Michael McNally Wed 8 May, 2019

company meeting

When economic conditions become challenging or you plan to take your business in a different direction, you are likely to review your staffing arrangements. If you are thinking of restructuring your business and will need to make some employees redundant you need to consider how to do this fairly and within the law.

It is important to be as fair and transparent as possible with your workforce to minimise the risk of alleged unfairness in the redundancy procedure under UK employment law. Michael McNally, employment law solicitor at Warners Solicitors in Kent, explains the principles you should consider in a restructuring and redundancy situation and how you can treat your employees fairly.

When you may have a redundancy situation

You are likely to have a redundancy situation if you are closing a business or a particular site of your business, an employee’s particular role or skill is no longer required, or you do not need the numbers of staff you have right now.

Redundancy consultation

When you have a redundancy situation you must not be tempted to make someone redundant on the basis of subjective reasons such as a personal dislike or because they have a protected characteristic such as race, sex or pregnancy as you could face an unfair dismissal and/or discrimination claim.

Instead, consider how you can follow a fair process that is non-discriminatory. This requires individual consultation with your employees in which you should explain your business reasons for selecting for redundancy, your proposed selection process, the proposed pool of those at risk of redundancy and how redundancy could be avoided such as by offering alternative work. You may even want to consider offering voluntary redundancy to some employees to make your restructuring drive easier, though this could prove costlier for the business.

If you plan to make at least 20 employees redundant during a 90-day period you must also undertake a ‘collective consultation’ which means consulting with the relevant trade unions. Bear in mind there are specific timescales and procedural requirements to comply with and the specialist employment lawyers at Warners Solicitors will explain how these apply to you in practice.

Ensuring a fair selection process

You can select the appropriate selection criteria to apply but it must be objective and fairly and consistently applied, otherwise you risk an expensive claim by an employee who claims they were wrongly selected for redundancy. For example, if one of your selection criteria is attendance, you should discount any absences related to pregnancy or maternity during the mother’s protected period and disability-related absences. When scoring against your selection criteria, make sure you are consistent and keep evidence showing how you allocate the scores in case of a later dispute.

You should also consider whether there are alternative positions in the business to which an employee could be deployed. Think about how this can be done fairly in practice, taking into account factors such as their skills and experience and the location of the vacancy.

Your obligations on redundancy

When making an employee redundant you must make a statutory redundancy payment if they have been employed for two years or more. Their entitlement depends on their years of service and is capped at a maximum amount determined by the government (currently £15,240). The amount payable is calculated by applying a formula which takes into account age and years of service.

To be confident you can restructure your workforce fairly and legally to minimise the risk of employment claims, specialist legal advice is vital. For further information, please contact Michael McNally in the employment law team on 01732 770660 or emailm.mcnally@warners.law. Warners Solicitors has offices in Sevenoaks and Tonbridge, Kent.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

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