Avoiding The Redundancy Pitfalls
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By Rebecca Lake
Many employers have made redundancies recently or are contemplating
doing so. In this article, Rebecca Lake, an associate in our
Employment Department, highlights three of the most common pitfalls
experienced by employers in redundancy situations and the penalties
attached, together with some practical tips for avoiding them.
What procedure needs to be adopted by the employer is determined by the
number of employees that are likely to be made redundant.
If the number could reach 20 or more at one site within a 90 day
period, employers must follow the statutory collective consultation
procedure. Key requirements include the election of employee
representatives and notifying the projected redundancies to BERR
(Department for Business, Enterprise and Regulatory Reform) 30 or 90
days before any redundancies are made (depending on numbers).
Failure to adhere to these rules allows each affected employee to apply
to the Employment Tribunal for up to 90 days’ gross pay, in addition to
any unfair dismissal claims.
When doing your sums, remember not only to look forward 90 days but
back 90 days too. Any redundancies made in the previous 90
days will also count towards the 20 employee threshold.
If contemplating making 19 or less employees redundant at one site
within a 90 day period, employers must adopt the three step statutory
dismissal procedure. Failure to do so may result in an automatic basic
award of four weeks’ capped pay and an uplift of 10 – 50 per cent on
the compensatory award.
A really tricky element of redundancy exercises can be devising fair
criteria to select one or more employees from a pool.
Frequently, the selection criteria chosen by the employer are
subjective rather than objective, performance being a prime example.
They should also try to add some objective criteria into the mix (e.g.
attendance, disciplinary record, length of service). If using
subjective criteria, try to collate evidence to support any score
awarded, such as appraisals or staff and client feedback.
If the business does not have ‘objective’ evidence to support a poor
performance score, why not ask two people to independently score
A common reason for successful unfair dismissal claims in redundancy
exercises is either that the employer has failed to consult at all with
employees, or that the consultation is a ‘box ticking’ exercise,
undertaken after a decision has really been made.
To avoid this, the language used during the consultation process should
reflect the fact that no final decision has been
reached. For example, ‘proposals’, ‘potential’,
’possible’, ’preliminary’ all give the impression that it may be
subject to change.
If you need to complete consultation quickly, consider giving
affected employees additional paid holiday to focus their attention
full time on the proposals during consultation.
© Davenport Lyons 2009. All rights reserved.
This document reflects the law and practice as at January
2009. It is general in nature, and does not purport in any way to be
comprehensive or a substitute for specialist legal advice in individual
About the Author
Davenport Lyons [www.davenportlyons.com]
is an international business law firm based in the West End of London.
has an excellent reputation in areas spanning corporate to property,
to intellectual property, music to film finance and digital rights to
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Article Published/Sorted/Amended on Scopulus 2009-03-26 01:14:35 in Legal Articles