WHAT IS REDUNDANCY?
Redundancy is a form of dismissal caused by an employer’s need to cut jobs, move the place of work or close down completely.
Redundancy is treated as a dismissal in law like any other dismissal and is therefore subject to the same protections against unfair dismissal.
It is essential that proper procedures are followed before taking the ultimate sanction of redundancy.
REDUNDANCY PAYMENTS
To qualify for a redundancy payment, employees must have at least two years service with, generally speaking, the same employer. However, a period of employment before the age of 18 does not count towards the two years.
An employer must pay those employees who qualify a statutory lump sum payment based upon their age and service. The details of these payments can be found HERE
EXCEPTIONS
Among those who are not included in the above are:
People who are not employees (for example self-employed contractors);
Employees who are made redundant after their 65th birthday;
Some people on fixed term contracts.
WHAT IF NO PAYMENT IS MADE?
Employees who have not received a payment but who believe they are entitled to one should write to their employer to claim it in the first instance.
If this is not successful or is not feasible, they may make a claim in the Employment Tribunals.
Employees are entitled to receive a written statement of the amount of the redundancy payment and how it has been calculated.
IF A REDUNDANCY PAYMENT IS MADE, IS THAT THE END OF THE MATTER?
A dismissal on the grounds of redundancy needs to meet certain conditions and be carried out fairly (see our help page on unfair dismissal).
Basically, that involves consultation with the employee(s) to try to find ways of avoiding the redundancy such as reducing overheads, alternative employment etc.
CONSULTATION
Even in cases of single redundancies, employers should consult the affected individual.
In cases of redundancies between 20 – 99 employees, consultation must, by law, commence at least 30 days before the first dismissal at any one establishment in any 90-day period.
If 100 or more employees are involved, consultation must commence at least 90 days before the first dismissal.
Consultation should be either individually or through trade union representatives or representatives elected specifically for the redundancy procedure.
Information about the reasons for the proposals, the numbers and groups of staff affected, selection process and the methods of carrying out the redundancies and payments involved must be provided as part of the process.
It is a common misconception that employers do not need to consult in situations with less than 20 redundancies. Failure to do so will almost certainly result in a successful claim of unfair dismissal by the employee provided they have one years’ service at least.
Any alternatives to the redundancy proposal should be looked into before going through with the decision.
DO EMPLOYERS HAVE TO NOTIFY THE DTI?
Employers proposing to make 20 or more employers redundant at any one place of work in a 90-day period must notify the Department of Trade and Industry (DTI) in advance.
IF YOU ARE AN EMPLOYEE OR EMPLOYER SEEKING ADVICE AND ASSISTANCE ON THE ABOVE, CONTACT US FOR A FREE INITIAL CONSULTATION
