Redundancy

The law of redundancy presents different challenges for employers and employees. Macleod & MacCallum can offer advice whether you are an employer or an employee although, obviously, it tends to be different depending on the perspective from which you are looking at redundancy.

The Employer’s perspective

All employers need to be aware of the law relating to redundancy. When times are good, employers can put in place procedures which will work more effectively than if they are left to the last minute. Whether you are looking to set up a procedure for use if the worst should happen or if you are facing the real prospect of making redundancies, Macleod & MacCallum is here to help.

The way in which the law of redundancy affects your business will depend upon many factors including the size of your business. For individual, tailored advice, please contact Graham Laughton or Fiona Campbell.

The Employee’s perspective

Employees tend only to need advice on redundancy when they are faced with the prospect of it – and often at fairly short notice. Macleod & MacCallum can offer you advice on all aspects of the employment relationship and the different ways in which it can be terminated. Your rights as an employee in the case of redundancy will vary depending on many factors, including length of service, the size of your employer’s business and the terms of your contract. For individual advice tailored to your circumstances, please get in touch with Graham Laughton or Fiona Campbell.

The Law

Whether you are an employer or an employee, your rights and responsibilities will generally originate from the same legislation. In summary, the law on redundancy provides as follows:-

What is the purpose of redundancy?

It establishes entitlement to a redundancy payment if the employee has been employed by the employer for two years or more.

It establishes the right to be consulted.

When does redundancy happen?

You are in a redundancy situation if employees are dismissed because of one of the following reasons:

1. The employer has ceased/intends to cease to carry on the business for the purpose for which employee was employed; or
2. The employer has ceased/intends to cease to carry on the business in the place where employee employed; or
3. The requirements of the business for employees to carry out work of a particular kind has ceased/diminished/expected to cease or diminish; or
4. Requirements of the business for the employees to carry out work of a particular kind in the place where they were employed has ceased/diminished/expected to cease or diminish.

Redundancy procedure 

Best practice is to have a formal policy, prepared during times when redundancies are not imminent. When preparing policy, employers should ensure that procedures are made known to employees – this can be done by including redundancy procedures in a Staff Handbook.

Once procedures are in place, they should be followed – failure to follow appropriate and reasonable procedures could lead to employers being liable for claims of unfair dismissal even if they have potentially good grounds for dismissal.

Macleod & MacCallum can offer advice on producing a robust procedure and on the options for implementing it to best effect or to the best advantage of the employer or the employee.

We can also advise on measures for minimising or avoiding compulsory redundancies.

Consultation

The purpose of consultation is to provide as early an opportunity as practicable for all concerned to share the problem and explore options. It can stimulate better co-operation between managers and employees, reduce uncertainty and lead to better decision making.

Consultation should take place as early as possible in every case and should precede any public announcements of the redundancy programme and the issue of notices of termination of employment.

Consultation should include ways of avoiding the dismissals, reducing the number of employees to be dismissed and mitigating the effect of dismissal.

Disclosure of information

Employers have a statutory duty to disclose certain information in writing. This includes:

• The reasons for the proposals
• The numbers and descriptions of employees to be dismissed
• The total number of employees of any single description employed by the employer
• The way in which employees will be selected for redundancy
• How dismissals are to be carried out (the procedure)
• The period over which dismissals are to take effect
• The method of calculating the amount of redundancy payments

Areas where advice is commonly sought by our clients include the level of protective awards; the criteria for selection for redundancy; voluntary redundancy; appeals; best practice and/or minimal acceptable standards adopted by employers when communicating and consulting with employees and, of course, the levels of redundancy payments.

If you think you would wish to receive further advice on any of the matters outlined above or on employment law issues generally, please feel free to contact Graham Laughton or Fiona Campbell.

Disclaimer: The information in this publication is based on the current understanding of the law. It has been produced for information purposes only. Professional advice should always be sought before taking any action.

Macleod & MacCallum cannot take any responsibility for loss incurred through acting or failing to act on the basis of anything contained in this publication.