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If you are restructuring your business getting the redundancy procedure right is crucial, as mistakes can open the door for an employee to bring a claim before an employment tribunal.

Here are some common misunderstandings and mistakes for employers to avoid.

Pitfall #1 – Failing to count voluntary redundancies towards the trigger for collective consultation

The obligation to inform and consult with recognised trade unions or employee representatives kicks in when you are proposing to dismiss as redundant 20 or more employees at one establishment.

If any employees have volunteered for redundancy, they must still be counted.

If you omit them from the calculation and do not collectively consult when you should, you could face claims for up to 90 days’ actual pay for each affected employee.

Pitfall #2 – Failing to consult with employees out of the workplace

An essential element of a fair redundancy is individual consultation, so do not forget about employees who are not in the workplace due to sickness absence, family-friendly leave or homeworking.

You must still consult with them, even if you have concerns that they may find it too stressful.  We can help you find the most appropriate way to do this, and can advise you on how to handle the discussions.

You may need to schedule more time in your redundancy process and may need to adjust your scoring, for instance relating to recent performance, to ensure that absent employees are not at a disadvantage.

You may also need to make adjustments to your process for disabled employees.

Pitfall #3 – Believing that ‘last in, first out’ is a fair selection approach

The approach of ‘last in, first out’ was once seen as a fair and uncontroversial selection criterion but it now carries the risk of age discrimination claims as younger employees are more likely to be the last ones in.

Another reason to avoid this approach, is that it is a blunt tool and may result in losing your best performers.

Pitfall #4 – Holding interviews instead of selection assessments

Making an employee apply for their own job is a risky way to select employees for redundancy when you are just reducing the number of existing posts and the remaining jobs remain largely the same.

An employment tribunal could find this selection process to be unfair. Instead,  it is usually best to use selection criteria and an assessment process.

However, it may be safe to use an interview process where the available jobs are new or have been significantly redesigned.

Pitfall #5 – Concealing assessment scores

One area for individual consultation is the employee’s assessment scores. To ensure that this consultation is meaningful, the employee needs to know:

• their own scores;
• the break point (the score above which their job would be safe) if there is one;
• within which quartile they scored; and
• the anonymised scores of the other employees in the pool.

Data protection rules only prevent you from disclosing these if individuals could be identified from the anonymised scores. If a claim is made however, there is no guarantee that the identity of other employees will not be revealed.

Pitfall #6 – Treating employees on family-friendly leave equally

Having selected employees for redundancy, you must offer them any suitable alternative roles in your business.

Make sure that you give priority to any employee you are making redundant while on maternity, adoption or shared parental leave. They have the right to be offered first any suitable alternative roles, so long as the terms of the job are ‘not substantially less favourable’ than their current job. If the job meets these conditions and you do not offer it, the redundancy dismissal will likely be unfair.

You must actually offer them the job; they do not have to apply, even if other redundant employees would make better candidates. Generally, the job must then be held open for the employee until they return to work.

Pitfall #7 – Consider suitable alternative employment

Allow time for trial periods, and remember that any time worked in an alternative role will count as part of the employee’s notice period if the trial period is unsuccessful.

How we can help

Speak to us as soon as you are considering making any employees redundant to ensure that you follow the correct procedure from the outset. We can advise you on tricky issues such as what is ‘an establishment’ for purposes of collective consultation and when is a job a ‘suitable’ alternative? With our advice, you can avoid jeopardising your business with a costly and disruptive employment tribunal claim.

Contact us

For further information, please contact one of our Employment experts.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.