After the Chartered Institute of Personnel and Development (CIPD) announced this week (15 February) that widespread job losses were on the way, Withy King’s employment lawyers are warning that redundancy should only ever be a last resort and that employers need to tread very carefully when making people redundant.
Despite the UK being officially out of recession, the CIPD reported one in three public sector employers will make redundancies this quarter and that further job losses are predicted.
Withy King’s employment team is warning employers not to cut corners when dealing with redundancies, if they want to avoid the potential threat of an employment tribunal.
Malcolm Gregory, partner and head of Withy King's employment team, said:
“Tread carefully and seek professional advice if you are unsure of the correct process to follow, as the wrong approach may result in a costly claim for unfair dismissal.
“Redundancy means the permanent dismissal of an employee because there is less work available. Making employees redundant should always be seen as a last resort. Employers are legally obliged to take reasonable steps to avoid compulsory redundancies.
“Redundancy is a complex issue and is full of pitfalls for the unprepared employer. The most common mistakes include not following the right procedures or timetable, using unfair redundancy selection criteria or methods and failing to consult properly with the individuals involved.”
A genuine redundancy situation only arises when an employee is dismissed for one of three reasons:
- The business closes down
- The employer closes down the workplace at which the employee is employed
- There is a reduced need for employees to do the work the employee is employed to do.
All employees with two years’ service are entitled to a statutory redundancy payment. Statutory redundancy payments are calculated according to the number of years a person has worked (service is counted up to a maximum of 20 years), their age and their gross weekly pay (‘week’s pay’ is currently capped at £380 each week).
Employers can pay more than the minimum. Some contracts require the employer to pay more. Redundancy pay of up to £30,000 is usually free of tax.
