Labour cost is usually the most significant for any business, which is why redundancy is one of the most obvious ways a company can reduce its overhead. Should the worst come to the worst and you have to reduce your costs to survive, just remember your considerations as an employer.

These considerations are there to protect both you, and the employees in the event there’s any disagreement on how redundancies are carried out.

As ever theres a lot of documentation on-line for this, but here are the basics.

What exactly is redundancy?

It is a form of dismissal from a job – reasons can include:

• new technology/systems have made a job unnecessary
• the original job no longer exists
• essential cost cuts means staff numbers must be reduced
• the business is closing down or moving

How much will I have to pay?

It depends….on:-

• Their age
• Length of continuous service
• Rate of weekly pay

Important!!!

Normal notice conditions still apply. i.e. if an employee is contractually obliged to 4 weeks notice, this must still be given or paid for in addition to any redundancy pay.

Who is eligible?

It can be anyone in the organization, but you need to be objective and ensure that no-one is selected unfairly. There should also be an appeals procedure.

What can be taken into account?

• attendance record (if this is fully accurate and reasons for and extent of absence are known)
• disciplinary record (if this is fully accurate)
• skills or experience
• standard of work performance
• aptitude for work
• Formal qualifications and advanced skills, but not in isolation
• Voluntary Redundancy

Who not to select?

There are a number of selection criteria which could result in an unfair dismissal claim, the most common of which are noted below:

• being on parental leave, or maternity-related grounds
• working part-time
• requesting flexible working arrangement
• Whistle-blowing
• participation in trade union activities
• taking action on health and safety grounds
• refusing to work on a Sunday

What happens next?

Consultation
If you intend to make 20 or more employees redundant over a 90 day period, you must consult your employees. Lack of proper consultation may result in an employee being eligible to take legal action.

Other Obligations

Job Hunting

If eligible, reasonable time off with maximum of 2 days pay –to look for another job, attend interviews or training for future employment.

Other Help

In addition to allowing your employees time off to look for new work or for training, it’s good practice to give redundant employees as much information as possible to help them at this difficult period of their working lives. Where possible, some support and advice should remain available to redundant employees after their dismissals.

Alternatives to consider

Reduced Hours/Pay

It may be possible to reduce the working hours/pay. Normal practice would be for the workforce or their union to agree to short-time working as an alternative to redundancies. Employees placed on short-time working might be able to claim Jobseekers Allowance for the balance of the hours they don’t work.

Early retirement – Any volunteers ?

Sabbatical – Some employees may wish to take time off to travel, take part in a charitable project or return to education with the option to return to work at some future date.

Before embarking on any decision making you should always take legal advice!.