Employers must follow a procedure which is fair, objective and non-discriminatory

Employers should:

• Consider alternatives to redundancy such as recruitment freezes, salary cuts/job shares/reduction in hours worked;
• Try to give as much warning as possible of potential redundancies;
• Consult with all employees who may be affected about avoiding/reducing redundancies and the process to be adopted;
• Identify any appropriate redundancy pools;
• Use objective selection criteria;
• Explore whether there is any alternative employment for any affected employee;
• Allow a right of appeal.

Where less than 20 employees are being made redundant, consultation need only be directly with the affected employees. However, if a union is recognised, it would still be advisable to involve them in the process.

Where 20 or more employees are being made redundant within a 90 day period a ‘collective redundancy’ situation arises. In such circumstances the employer must notify the Department for Business, Energy and Industrial Strategy and consult with a recognised trade union. If there is no recognised trade union representing all of the employees affected, the employer must consult with elected employee representatives before issuing redundancy notices. Failure to follow the collective redundancy procedure may result in a criminal offence being committed and may also result in awards of up to 90 days’ pay per affected employee.

Once an employee has completed two full years of service, they are entitled to a statutory redundancy payment.

The amount of the redundancy payment depends upon the employee’s age and length of service as follows:

• Half a week’s pay for each year worked up to the age of 22;
• A week’s pay for each year worked between the ages 22 and 41;
• A week and a half’s pay for each year worked above the age of 41.

The statutory limit for a week’s pay is currently capped but changes every year and the length of service is limited to a maximum of 20 years.

The redundancy payment should be paid on the last day the employee works or as soon as possible after that date. Redundancy payments up to £30,000 can be paid free of tax and national insurance contributions.

We can help you manage the redundancy process. We can ensure you understand both your rights and obligations to your employees and help you to protect your business from an expensive Employment Tribunal claim.

We offer a fast, efficient, personal service to meet your individual business needs. For straightforward redundancy programmes, we can discuss the possibility of a fixed fee staged redundancy procedure including template letters, guidance notes specific to your business and telephone advice for follow-up issues and questions.