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Restructuring, Reorganisation 3C

Restructuring, reorganisation and redundancy

Any changes to the workplace will nearly always have an effect on staff. This can include the need to make redundancies, so whether you’re an employer or employee it’s good to know your rights and what might occur. We’ve put together these guidelines to walk you through redundancy procedures. And if you need additional advice we can help you with that too.

Redundancy occurs in three different types of situation:

  • Business closure
  • Workplace closure
  • Reduction of workforce

If a business is making 20 or more employees redundant over a period of 90 days or less, there are things that they must do; firstly inform and consult appropriate employee representatives and also tell the Department for Business, Innovation and Skills (BIS).

It’s also really important at this point that they consider whether they can avoid making compulsory redundancies or reduce the number needed. This can be done by:

  • Suspending or restricting recruitment
  • Reducing or removing overtime opportunities
  • Not renewing contractors’ contracts
  • Ceasing or reducing the use of agency workers

An employment tribunal can award up to 90 days’ pay for each employee if the business has not consulted adequately. The business can also be fined for failing to notify BIS.

  • The business should also ensure that it follows a fair procedure during the redundancy process (including consulting with employees properly) to minimise the possibility of claims for unfair dismissal
  • Redundancy is a potentially fair reason for dismissal. But there are situations that make it unfair unless the business:
    • Identifies an appropriate pool of employees for selection for redundancy
    • Consults with the individuals in the redundancy selection pool.
    • Applies objective selection criteria to the employees in the redundancy selection pool.
    • Considers suitable alternative employment where appropriate (subject to a trial period).

When is selection unfair?

There are definitely situations where the selection of a person to be made redundant is automatically unfair. This can be if they are chosen:

  • For a reason connected to pregnancy
  • Because they refused to sign a working tie opt-out agreement; or
  • For reasons related to trade union membership or activities.

Redundancy pay

Employees with at least two years continuous employment with the business at the point they are made redundant will be entitled to a statutory redundancy payment. Some may also be entitled to enhanced contractual redundancy, if it’s written into their contract.

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