Considering Downsizing? 

It will not surprise you that we are particularly busy in the area of assisting clients to make redundancies.   Here are some facts associated with such an exercise. 

Do we have to ask for volunteers?

Yes, it is generally a good idea to consider asking for volunteers.  This may not always be required depending on the circumstances.

How does the law treat volunteer applications for redundancy? 

Employees who volunteer and are accepted for redundancy are still regarded in law as having been dismissed, i.e. they have not resigned. This means you must still continue to follow a fair redundancy procedure in respect of any volunteers, which incorporates the statutory dismissal and disciplinary procedure.

Is there a legal definition of Redundancy?

Yes, and it is important to be aware of it.  The definition is contained in the Employment Rights Act 1996.  In summary, an employer must demonstrate that there was, or is expected to be, a cessation or reduction in the work, where the employee was employed.

We currently have five operators performing the same work and we now only require three, does it have to be the last two employees to join the Company who are made redundant?

No, remember that since the introduction of Age legislation, it is illegal for employers to select employees for redundancy on the basis of their age, or age related factors such as length of service, unless this can be objectively justified.

The most important matter is to draw up and agree a selection method.  There are various methods and techniques that can be used.  Often an employer will need to retain key skills within the business and this forms the basis of the criteria. 

How much is redundancy pay?

Statutory redundancy pay is calculated according to a formula set out in law. The practical application of the formula is:

·          1/2 a week's pay for each year worked between 18th and 22nd birthday;

·          1 week's pay for each year worked between 22nd and 41st birthday;

·          1 1/2 week's pay for each year worked after 41st birthday.

The most recent 20 years (only) are taken into account for the purposes of this calculation.   Employees with less than 2 years service do not qualify for a payment.   There is a statutory limit (as from 1^st February 2009, £350 per week – currently £330. 

Can we lay staff off as opposed to making them redundant?

The right to lay-off employees without pay depends on the contractual position. Where it is imposed by an employer without a contractual right to do so, employees could pursue claims to an Employment Tribunal for constructive dismissal and/or unlawful deduction from wages. Constructive dismissal claims can arise when employees resign because their employer has significantly breached the employment contract.

Even where the contract permits lay-off without pay, employment law   provides for employees to be paid a guarantee payment, which is currently £20.40 (this is due to increase on 1 Feb 09 to £21.50). The payment is limited to a maximum of 5 days in any period of 3 months.