Do's and Don'ts of Redundancies in the UK

​This past summer, rail firms in England and Wales decided to install ticket purchasing machines and reduce the number of staff at rail stations over the next three years as part of efforts to modernize the rail system. While notices for the reduction in force—known as a redundancy in the U.K.—haven't been issued, the specter of potential job losses hangs over the announcement, and the rail firms, as well as other employers throughout the U.K., should keep in mind the proper ways to handle redundancy situations. 

What Is a Redundancy?

The statutory definition of "redundancy" covers three main situations: the closure of an entire business, the closure of a particular workplace, and a reduction in the workforce. The most common type is the third—which also spurs the most disputes and complications.

"The key claim that an employee is likely to have or is likely to want to pursue in a redundancy situation if the employer gets it wrong is a claim for unfair dismissal," said Claire Dawson, an attorney with BDBF Employment Law in London. In the U.K., if an employee has two years of service with the company, that employee has the right to not be unfairly dismissed. Redundancy is potentially a fair reason for dismissal, but it has to be handled correctly.

In an unfair dismissal case, the burden of proof is on the employer to show it has a potentially fair reason for dismissal, such as redundancy, Dawson said.

Follow Proper Procedures

Certain procedures must be followed in a redundancy situation. In the U.K., collective redundancies and individual redundancies are handled differently. A collective redundancy occurs when an employer wants to make 20 or more employees redundant, regardless of whether that is the number that ends up being made redundant at the end of the process. It's important to determine up front whether that 20-person threshold will be reached.

"Collective redundancy consultation is more complex than individual redundancy consultation, and generally, the issue with collective redundancy consultation is you have to consult with employee representatives, and these need to be often elected before the consultation process starts," said Emmanuelle Ries, an attorney with Kingsley Napley in London. 

Employers must individually consult with all employees affected by a redundancy, even if a collective consultation is planned, notes the Chartered Institute of Personnel and Development (CIPD), an HR organization headquartered in London. Employers should consult individually with employees about alternatives to redundancy, ask for volunteers for redundancy, and make sure to explain the pooling, selection and scoring processes.

Collective dismissals of 20 or more employees are covered by specific statutory procedures, according to the CIPD. When an employer wants to make 20 or more employees at one establishment redundant within a 90-day period, the employer must consult representatives of the affected employees in addition to the individual consultations.

When consulting, employers should frame what they would like to do as a proposal, rather than a definite decision. Otherwise, employees may claim unfair dismissal, said Charlotte Staples, a lawyer with Shoosmiths in Nottingham, England.

Select a Pool and Consider Alternatives

In addition to considering alternatives to redundancy, employers must select a pool of employees who could potentially be made redundant as part of the consultation process. In general, making sure all selection criteria are clear and objective is key to avoiding unfair dismissal claims. 

HR should identify potentially discriminatory selection criteria and remove them to prevent discrimination claims later. Women who are pregnant or on maternity leave have additional protections against being made redundant.

During the notice period after a redundancy, an employer is obligated to look for a suitable employment alternative within the company or any group companies for redundancy employees until the day they leave their current employment. An employee is entitled to a period of notice and holiday pay accrued up to the termination date, as well as a redundancy payment, according to the CIPD. An employee must therefore be given either statutory minimum notice under Section 86 of the Employment Rights Act 1996 or contractual notice, whichever is greater.

Overall, it's important for companies to plan carefully when they are looking to make any redundancies—and to pay attention to notification and consultation obligations. "It's something that you can't just snap your fingers and realize in a very short period of time," Dawson said.

Katie Nadworny is a freelance writer in Istanbul.