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Redundancy - legal guidance
Requirements to inform and consult regarding collective redundancies
are based are contained in the Trade
Union and Labour Relations (Consolidation) Act 1992 Part IV
Chapter II (TULRCA). The law relating to redundancy as it affects
individuals is contained in the Employment Rights Act 1996.
The duty to consult the union is triggered when the employer proposes
to dismiss as redundant at least 20 employees at one establishment.
Where there is no recognition agreement the employer has to invite
the employees to elect representatives, whom they then have to
Section 188 of TULRCA states that consultation must begin in
good time, the minimum period being 45 days where 100 or more
employees are to be made redundant and 30 days for less than 100.
The employer has to consult the union on ways to avoid dismissal,
ways to reduce the numbers being dismissed and ways to lessen
the impact of dismissals.
As part of the consultation process, the employer has to tell
the union, in writing
- why redundancies are being proposed
- how many employees and what type of employee may be made redundant
- the total number of such employees at the establishment or
unit the employees are assigned to – ‘the pool’
- the method the employer intends to use to select employees
for redundancy – ‘the selection matrix’
- the procedure under which redundancies will be carried out,
including the timing of redundancies
- the method of calculating redundancy payments.
All but the last of these should be contained in the HR1 Form
completed by the employer for the DTI (now BIS) and copied to
the union. Once the union has the required information the employer
has to provide access to those employees affected by the redundancy
proposals. Where an employer fails to consult as required by section
188, the union or any affected member can complain to an Employment
If a tribunal finds that an employer has breached s.188 it will
issue a declaration and can also make a protective award.
A protective award is an amount of money payable by the employer
to employees who are threatened with redundancy or who have been
made redundant, where the redundancy has not been consulted on.
The amount is the earnings the employees would have received for
a protected period. The protected period starts with the date
of the first redundancy or the date of award if the redundancies
have yet to take place and lasts for up to 90 days depending on
the level of the employer’s failure.
Redundancy and Unfair Dismissal
Under the section 98 of the Employment Rights Act 1996 (ERA),
redundancy is one of the potentially fair reasons for dismissing
an employee. If it is accepted that redundancy was the real reason
for dismissal, the test for fairness translates into whether or
not it was fair to select that particular employee for redundancy.
It will be automatically unfair to select an employee for redundancy
if the reason they were selected was one of the protected reasons
such as trade union membership, whistle blowing or for exercising
various other statutory rights. NB There is no minimum length
of service for claiming automatic unfair dismissal. In deciding
whether a particular selection was fair Employment Tribunals will
look two aspects of selection: the pool for selection and the
When considering the reasonableness of an employer’s selection
of the group of employees at risk of redundancy, relevant factors
- Other employees dong similar work
- Employees doing interchangeable jobs
- The employees’ previous jobs with the employer
- Trade union agreement
The most important test of the reasonableness of including any
particular selection criteria in the matrix is whether or not
it is objective. Objective criteria would include length of service,
disciplinary records and qualifications. These criteria can all
be measured and supported by documentation, unlike subjective
criteria like appearance and attitude. The use of some criteria
may also breach other employment protection rights. For example,
using attendance records could infringe provisions relating to
parental leave, and considering sickness absence without making
adjustments for disability could breach the Disability Discrimination
Act. It had been thought that using length of service may now
be outlawed under the Age Discrimination Regulations. However,
the Employment Appeal Tribunal has now ruled that it is legitimate
for an employer to consider employee loyalty over time as one
factor in redundancy selection.
Like any claim for unfair dismissal a claim for unfair selection
for redundancy must be lodged with the Employment Tribunal within
3 months of the date of dismissal.
Where an employer offers suitable alternative employment,
there is no redundancy, and therefore no right to a redundancy
payment, if the employee unreasonably refuses the offer. In considering
the suitability of the post, factors to consider include the content
of the job, its status within the employer, the pay and hours
of work and the job prospects.
Only employees with a minimum of two years continuous service
are entitled to redundancy payments and those payments are calculated
based on the employee’s length of service and age at the
date of redundancy.
Page updated: 2 March 2015
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