Pitfalls to avoid when making redundancies
Posted on 6th May 2021 at 10:48
The redundancy process can be a challenging time for your business, especially if the cuts are due to finances rather than choice. Unfortunately, challenging times can cause employers to make mistakes, and if these mistakes lead to employment claims they can be very costly.
Here we explain the mistakes employers are most likely to make, the risks involved and how to avoid making the same mistakes.
1. Not having the legal right to make redundancies
Your business does not have to be struggling to make redundancies, but you must make sure that the statutory definition of redundancy is satisfied. Redundancies cannot be used as an excuse to dismiss staff members for reasons unconnected with redundancy.
Before beginning a compulsory redundancy process it is sensible to consider whether there are alternatives available. Legal advice can be very useful here.
2. Using a standard template
There is no one ‘standard’ process that works for all businesses. Every business is different, and individual factors will affect how you go about making redundancies. Details such as how much warning you need to give employees and who you need to involve in decisions will depend upon circumstances such as the number of roles you are making redundant and the time individual employees have worked for you.
A template process may not account for your specific circumstances and what worked for another business may fall short of your legal obligations, leaving you open to the risk of claims.
3. Incorrect consultation
Decisions such as which organisations you must involve, how long consultation must last, and the notice you must give will depend upon factors specific to your business. The number of variables mean this can be complicated to work out. If you get it wrong, you could end up paying additional compensation to employees or facing unlimited fines from the Redundancy Payments Service.
4. Misunderstanding the status of your ‘employees’
An individual’s redundancy rights depend on their employment status. This is not always as clear cut as referring to status in their contract.
If a former member of staff disagrees with you about their employment status and their rights, you could face an employment claim. In this case, the tribunal would consider which status best fits your working relationship to decide what rights the individual is entitled to, which may include a right to a redundancy payment.
A solicitor can help you to work out the status of your staff in practice, so that you know what rights they have and what obligations you have. This will avoid mistakes that could lead to you wrongly denying an employee their rights and result in you facing an unfair dismissal claim.
5. Using unfair or discriminatory criteria
There are well established legal principles that influence and affect how you may choose employees for redundancy. You must make sure that you adhere to those principles and don’t create an unnecessary risk of claims against the business. The law prohibits the use of certain criteria; a poorly thought out or mis-applied procedure may discriminate against some employees even if you didn't intend to.
A solicitor can help you to plan a selection system that protects your business interests without leaving you open to legal claims.
How can we help?
Our Employment Law solicitors can help you to structure a fair, legal redundancy process tailored to your business circumstances. We will get to know your individual business and the aims you hope to achieve through making redundancies, so we can help you to make the best decisions for your organisation.
We will help you to understand all your obligations, from correct consultation to choosing candidates based on legal considerations, to reduce the risk of legal claims and penalties.
Thanks to our extensive experience we can support you through the redundancy process swiftly and smoothly, reducing the period of upheaval and uncertainty for your business and your employees.
Get in touch to discuss your aims and how we can help.
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