Redundancies hit record high – But what key things should employers consider when making redundancies?

In the 3 months to November 2020 the ONS has revealed that the redundancy rate reached a record high of 14.2 per thousand. Redundancies have particularly hit industries such as retail, travel and hospitality. With the current furlough scheme set to end on 30th April it is important for businesses who are considering making redundancies to ensure they are aware of the correct processes and procedures. 

This article summarises the key steps employers must follow when making redundancies to ensure they conduct the process fairly and within the law.

The consultation process

The number of redundancies you are looking to make will dictate the procedure you need to follow.­­ 

If you are making fewer than 20 people redundant, you are not legally obliged to carry out the consultation process, but it is best practice to do so. 

If making collective redundancies of between 20-99 people in 90 days, the consultation period must start at least 30 days before the first dismissal. If the business is looking to make more than 100 employees redundant, 45 days is the minimum consultation period. 

Failure to carry out the process fairly and thoroughly could mean you are risking a potential employment tribunal later. 

In any consultation, you will need to do the following:

• Inform staff of the reasons they are facing redundancy and if there are any other options.
• Allow employees to communicate their views. Redundancies can be a highly emotional time, and you must show support and sensitivity.
• Consult with each employee that is facing redundancy individually.

You are also required to provide written communication to each employee at risk of redundancy. 

Once the consultation process has taken place, employers are required to provide notice of redundancy and this depends on how long an employee has worked for the company. 

Redundancy pay

Employees with more than 2 years’ continuous service who are made redundant are usually entitled to a statutory redundancy payment that is based on length of service, age and pay, up to a statutory maximum. 

For furloughed workers made redundant, the government introduced regulations to ensure furloughed employees receive redundancy payments at 100% of their normal pay, rather than the reduced furlough rate. 

The redundancy process can be difficult to navigate, with many factors to consider. To support you in getting this highly complex process right, please contact our employment law team today.