Redundancy is defined in two ways: “The employer has ceased, or intends to cease, to carry on the business, completely or at that location”, or “The requirements of that business for employees to carry out work of a particular kind, or to carry it out in the place in which they are employed, has ceased or diminished or are expected to cease or diminish”. Examples of redundancy include:
- Termination of a Fixed Term Contract where all the above conditions are fulfilled.
- An organisation with one or more of its sites closing.
- A reorganisation is undertaken which shows that over staffing exists.
- A downturn in the amount of work available for employees.
Consult your redundancy policy/procedure and discuss the risk of redundancy at Senior Management/Board/Executive level. Consider past redundancies, custom and practice and organisational policy (ensure the policy doesn’t detrimentally affect any employment or statutory rights. If the policy falls below the minimum three step statutory dismissal process, as set out below, you should refer to the LRA guidance: ‘Advice On Handling A Redundancy’).
If redundancy is likely, consider:
- Who is likely to be affected?
- All employees? A particular skills base of employees? A department?
- Will you use redundancy selection criteria to select for redundancy?
- Is alternative employment available?
- Will there be competition for alternative employment?
Time scale and planning
- Set a detailed time scale to tell staff that there is a risk of redundancy
- Seek advice; ensure managers carrying out the procedure understand the process
- Plan consultation meetings as soon as possible, and consider the information you should provide, such as: What is the redundancy risk, to whom, and why? Who will tell staff, how, and when?
- Pencil in dates for applying selection criteria, alternative employment or competition between selection pools, potential dismissal and notice periods.
- You are always aiming to avoid redundancy, however, if you have to proceed a realistic timetable will be invaluable.
Alternatives to redundancy
Consider measures for avoiding redundancy such as:
- Inviting volunteers for part-time or flexible working
- Inviting volunteers for redundancy (may include enhancement of redundancy package, the employer has the right to turn down voluntary redundancy requests, perhaps from key employees)*
- Agreed or contractual variation to working hours, temporary reduction in pay, short-term working or temporary layoff.**
*Avoid potential discrimination by equitably inviting volunteers. Avoid inviting only part-time, fixed term or older workers, or employees from a particular community background or gender.
**Lawful variations of a contract of employment must have agreement of both parties. Imposed variations can be challenged. Employers can impose change by dismissal and reengagement, however this should be treated with caution and advice should be sought. LRA Advisory Guide ‘Advice on Changing and Agreeing Contracts of Employment’.
Selection for redundancy
- Consider selection pools: by department, those doing similar/interchangeable work, particular areas of funding.
- Selection criteria must be applied impartially, be objective, fair, consistent, and precisely defined.
- You can weight criteria and use a scoring matrix to apply criteria.
- Criteria must be capable of being applied in an impartial way. (Attendance, experience, capability, skills, qualifications, competencies, live disciplinary records, length of service).
- Avoid using only one or two criteria in isolation, as this could increase the risk of discrimination against a particular group.
- Avoid discrimination.
- You can select sick, disabled, pregnant or new mothers for redundancy provided this is not the basis for the selection.
By law you do not have to consult where there are less than 20 redundancies, but NICVA would advise organisations to follow the best practice approach.
Consult and communicate
1. The employer writes to the individual explaining that redundancy is being considered, inviting them to a consultation meeting, and explaining the process to be followed. (Allow the employee to be accompanied by a colleague or trade union representative). The letter should be issued at the beginning of the consultation period, before a final decision on redundancy has been made. It should contain the following key points:
- Informs the employee that their employment is at risk and outlines the reason for this.
- Outlines the number of posts affected and the reason that the employee’s job has been selected for potential redundancy.
- Informs the employee that the organisation will make every effort to find them alternative employment.
- Invites the employee to a consultation meeting.
- Informs the employee that they have the right to bring a trade union representative or colleague to this meeting.
- Outlines what the consultation will involve and the process following consultation.
- Tells the employee who to ask for support or more information.
2. A consultation meeting is held with the employee to listen to the employee and explain:
- Why they are at risk of redundancy
- The selection criteria used
- Any options for redeployment
- Any help or support the organisation can offer the employee in terms of seeking a new job.
The employee can use this meeting as an opportunity to put forward any suggestions they have to avoid redundancy. (Allow the employee to be accompanied by a colleague or trade union representative).
3. Following at least a two week gap, allowing both employer and employee to consider what has been discussed, the individual is invited to a second consultation meeting. The employer then confirms whether the redundancy will go ahead or if suitable alternative employment can be offered.
There is no legal minimum consultation period when making less than 20 employees redundant but NICVA would encourage organisations to have at least a two week consultation period where possible.
Redundancy confirmation and notice
4. The employee is informed in writing of the redundancy, giving notice as per the employee’s contract of employment and details of the redundancy pay that they will receive.
The employee is given the opportunity to appeal against the decision made.
The organisation must follow the minimum three step statutory dismissal process.
- Step 1 – Write to the employee to let them know that their employment is at risk.
- Step 2 – Arrange to meet the employee to discuss the matter further and let them know the final decision. The employee has the right to be accompanied by a colleague or a trade union representative at this meeting.
- Step 3 – Give the employee the opportunity to appeal against your decision.
Recommended minimum checklist
- Statement of intent. Notify selected employees in writing that you are contemplating dismissing them by reason of redundancy, providing all relevant info in writing (consult recognised trade union).
- Consultation and communication. Invite to consultation meeting(s) and allow accompaniment. Meet.
- Consider measures for avoiding and minimising redundancies (alternative employment).
- Pools for selection and apply selection criteria.
- Announce redundancies.
- Allow employees reasonable time off during notice to seek other work or attend training.
- Inform employees of termination of employment, notice and invite to appeal.
- Carry out redundancy- dismiss following minimum three step statutory dismissal.
- Hold appeal, allowing accompaniment.
- Notify final decision.
Employees must be given comprehensive information about any alternative roles including, a description of duties, the status, pay, working hours, and location.
Employees accepting alternative employment are entitled to a trial period, agreed in writing, of four weeks or more. The trial period is to assess the suitability of the role for the employee; and the employee’s ability to carry out the duties of the role. This period may be extended for re-training purposes.
If the employee works beyond the agreed trial period they may lose their right to redundancy. Employees may lose their right to redundancy if they reasonably refuse an offer of suitable alternative employment.
If there is a dispute over suitability or lesser terms and conditions it may be considered reasonable for an employee to refuse an offer which constitutes a detriment in terms of duties, status, or terms and conditions. The employee would then have the right to accept redundancy.
If an employee accepts an offer of alternative employment which constitutes a detriment in terms of duties, status or terms and conditions they would not have the right to a redundancy payment or part thereof, unless the offer was refused during the trial period.
Employers should offer employees “any and all” alternative employment. Employers should not assume an employee will refuse any offer of alternative employment at lesser status or terms and conditions.
If alternative employment arises during redundancy process, you may suspend the redundancy process to offer employment.
If alternative employment arises after a redundancy when dismissal has taken place, and the employer genuinely did not know the opportunity would arise, the employer does not have to offer the post to the employee. Employees may challenge this and have the right to submit a claim to an industrial tribunal.
Additional points of information
Redundancy should not be used as an alternative to dismissing an employee for capability, poor performance, or conduct and should always meet the definition of redundancy.
Employees on maternity leave have additional rights in a redundancy situation and would have the right to an offer of alternative employment before any other staff member. Employees have the right to submit a claim to an industrial tribunal, normally within three months of dismissal. Redundancy and Payments due: Employees must have at least two years continuous service to have entitlement to redundancy pay. All employees will be entitled to notice pay or pay in lieu of notice, in addition to redundancy pay. Employees will also be entitled to any outstanding holiday entitlement.
Statutory redundancy pay = Age x Service x Pay
For each complete year of service, employees are entitled to:
- Half a week’s pay for each year of service under age 22
- One week’s pay for each year of service at age 22 but under 41
- One and a half week’s pay for each year of service at age 41 or over.
A week’s pay is what the employee is entitled to under their contract at the date on which the employer gives the minimum statutory notice.
Statutory notice and pay
The contract of employment may give more notice than the minimum statutory notice, which is:
- One week for employees who have worked for their employer for one month but less than two years
- Two weeks if the employee has worked for their employer for two whole years
- One extra week for each further whole year’s employment at the date the notice period expires, up to a maximum of twelve weeks’ notice in total.
The employer should adhere to either statutory or contractual notice periods, whichever is the greater.
Unable to pay Statutory Redundancy
Department for Employment and Learning (DEL) may give financial help if the employer can show:
- The redundancies are genuine.
- Financial circumstances are such that the employer cannot make statutory payments.
- The employer has explored all other reasonable sources of finance without success.
ER Booklet 17 ‘Help with meeting redundancy costs for employers in financial difficulties’ (Department for Employment and Learning): If the employer becomes insolvent the employee may be able to claim unpaid wages or redundancy payment from HMRC.
ER Booklet 5 ‘Your rights if your employer is insolvent’ (Department for Employment and Learning).
Issuing ‘protective notice’ is a common voluntary sector practice. The notice letter informs staff that funding associated with their contract of employment is due to end and confirms this date. Protective notice usually includes reassurance that if further funding is secured staff contracts will be renewed in line with this funding.
There is no such term as ‘protective notice’ in employment legislation.
The principle to inform staff as early as possible if their employment is in danger is advisable, and protective notice should always be carried out in line with the best practice approach to redundancy consultation and the statutory dismissal procedures and should not diminish these employee rights.
In any redundancy situation, the immediate priority is the fair and sensitive treatment of employees who are losing their jobs. However, organisations should bear in mind that those redundancies may have an impact on employees who do not lose their jobs, this in turn will impact negatively or positively on the effective performance of the organisation. Therefore, the primary objectives of management should be to:
- Give all the workforce a full explanation of the situation and explain the policies and practices adopted to those made redundant
- Demonstrate the necessity for change
- Give an appraisal of future employment prospects and details of changes in working arrangements
- Handle redundancies in a responsible, fair and honest way
- Provide a forward-looking, positive attitude for the future and show survivors the value of their role in that future
- Conduct, where necessary, individual discussions with remaining key workers to reassure them of their importance and employment prospects
- Ensure that managers have, or develop, the necessary personal skills and attitude to operate effectively during periods of traumatic change.
Further sources of information:
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