If you are dismissed because of redundancy, you will probably be entitled to a redundancy payment. And there is a possibility that the dismissal will be unfair. In this article, a solicitor from Thompsons' Employment Rights Unit in Liverpool, summarises the law and answers some commonly asked questions.

The law

An employee is redundant if the reason for dismissal is because: 

  • the business is shutting down; or 
  • the workplace is closing down; or 
  • the employer does not need so many employees to do certain work, even if the work still exists

The third category is the most common. For example, employees may be made redundant because of a business reorganisation which results in a more efficient use of labour. They are unlikely to be able to claim unfair dismissal, however, even though their previous duties are now being carried out by an ex-colleague.

But employers always need to follow certain procedures to avoid facing claims of unfair dismissal. They need to engage in meaningful consultation, identify and choose a selection pool, establish selection criteria, apply the criteria fairly and consider whether any suitable alternative employment exists for those facing redundancy.

Frequently asked questions

  • What is the employer's duty to consult?

In every redundancy situation employers must carry out meaningful consultation. They should give as much warning as possible of redundancies and try to agree a selection pool and selection criteria with the recognised trade union and/or individual employees. They should also consider whether any suitable alternative employment exists. When should consultation begin? 
Employers should start consulting as soon as they are aware there may be redundancies. 
There is no set timetable for consultation unless the employer is proposing to dismiss at least 20 employees at one workplace, when specific rules apply under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. If the employer breaches the rules, they could end up paying a protective award claim of up to 90 days' pay to each affected employee. Why should consultation take place? 
The point behind the compulsory consultation process is to encourage trade unions and employees to come forward with ideas during the consultation process to minimise its impact. For instance, there may be employees who are prepared to volunteer for redundancy. 
It also gives employees the chance to find out why they have scored badly (if they have) on specific selection criteria. For example, if attendance is one of the criteria and they have been absent due to a disability, this should be taken into account by the employer to avoid any possible breaches of the Disability Discrimination Act 1995. 
The dismissal will be automatically unfair if the employer fails to consult, even if the consultation would not have made any difference to the outcome. In these circumstances, tribunals will only award compensation for the period of time that it would have taken for a proper consultation to take place. What is the pool for selection? 
It is crucial for employers to choose the selection pool carefully to avoid claims of unfair dismissal. They should take the following factors into account: 

  • whether other groups of employees are doing similar work to the group at risk 
  • whether employees' jobs are interchangeable 
  • whether the employee's inclusion in the pool is consistent with their previous position, and 
  • whether the selection pool was agreed with the union 
  • What are the selection criteria? 

The selection criteria must be objective. For instance: skills, qualifications, absenteeism, disciplinary record and length of service. In large organisations, the selection criteria may have already been agreed with a trade union and will be set out in the company handbook. 
Once the selection criteria have been applied, employees should have a right of appeal against their individual scores. Employers are not required to provide employees with details of their colleagues' scores, but they should notify employees of the cut off score for retention. If selection criteria are applied unfairly then the dismissal is unfair. What obligation is there to find other employment? 
Employers are obliged to do what is 'reasonable' in order to look for alternative employment for affected employees. However, there is no obligation to create posts. If an employee discovers that suitable alternative employment existed for them at the time of their dismissal for which they were not considered, then their dismissal is likely to be unfair. Can an employee work on a trial basis? 
Employees are entitled to try out a new role for a trial period of four weeks. If they then think that the job is unsuitable, they can inform the employer and still make a claim for a redundancy payment. However, they must tell their employer they are not taking the alternative job before the end of the four week trial period. If certain conditions are met the trial period can be extended. Can the employee refuse the other work? 
If an employee facing redundancy is offered suitable alternative employment and unreasonably refuses to accept this job, then they may lose their entitlement to a redundancy payment. The question of what is reasonable will ultimately be determined by an employment tribunal. Is there a right to time off to look for work? 
Employees who are under notice of redundancy have a right to a reasonable amount of paid time off during working hours to look for new work or to make arrangements for training for new work. These rights only apply to employees with two or more years' continuous service. If an employer refuses this right, then the employee can claim compensation from an employment tribunal of not more than 40% of a week's pay. What payments do employees qualify for? 
Employees with at least two years' continuous service are entitled to receive a statutory redundancy payment. This is calculated by reference to gross weekly pay and length of service. The amount of weekly pay is capped at a maximum of £270. The maximum entitlement is £8,100 for an employee aged 61 to 64 with 20 years' service. 
Some employers have enhanced redundancy agreements for employees. If so, employees may qualify for these payments in addition to, or instead of, the statutory redundancy payments. If the employer fails to honour this contractual payment, a claim for breach of contract needs to be issued within three months from the date of dismissal. What can an employee do if their redundancy is unfair? 
If all the requirements of a fair redundancy procedure have not been followed correctly, then the dismissal may be unfair. An employee needs one year's continuous service to qualify for unfair dismissal rights. If an employee wishes to pursue a claim of unfair dismissal, it must be lodged at an employment tribunal within three months of the date of dismissal.