Redundancy and Strategic Business Reorganisation
Redundancy is only a reason for dismissal, however it is treated separately because the employer has to take certain steps to make sure that the redundancy is carried out fairly. If the redundancy is not carried out fairly this could lead to a claim for Wrongful Dismissal, Unfair Dismissal or a Redundancy payment, either based upon the legal minimum or based upon the employee's employment contract.
Redundancy involves either the closure, (whether temporary or permanent) of a business as a whole or closure of a particular workplace where the employee was employed or a reduction in the size of the workforce.
When carrying out a redundancy an employer must draw up a plan to decide who will be kept on and who will be made redundant and why. The employer must consult the employees\' representatives (this includes Unions) if 20 or more people are going to be made redundant. This involves discussion of the business reasons for making the closure.
These discussions must take place before a final decision on closure of a workplace is made.If the employer does not consult properly the Employment Tribunal can make the employer pay a 'Protective Award'. This states that the employer must keep the employees on and must pay their wages for a certain amount of time (whether they actually remain working or not).The length of this Protective Award period is usually fairly short.
If a group of employees are selected for redundancy the employer must show what type of work they do and why the demand for that work has decreased or stopped completely. Selection criteria should not be based upon an individual's view of each employee, (for example, what the personnel manager thinks).