Restructuring & Redundancy

For a redundancy dismissal to be fair, you must be able to show that redundancy was the real reason for the dismissal, and that you acted reasonably. This includes following a consultation process and consulting with employees before making any final decisions. 

Consultation with individual employees is fundamental to the fairness of any dismissal for redundancy. In order to consult properly, you must have an open mind and give your employees a chance to influence your decisions during the consultation process. 

This suggests that consultation will only be meaningful if it happens at an early stage in the redundancy process. You must also give employees adequate information about the plans and a reasonable and adequate opportunity to respond. 

If you’re planning to make 20 or more employees redundant at one establishment within a 90-day period, you’ll also have to engage in collective consultation. This means consulting with a trade union or, if there’s no recognised union, elected employee representatives. What you should discuss during the individual consultation process will depend on the specific circumstances, but you should usually give the employee the chance to:

• Comment on how employees are being selected for redundancy
• Challenge their redundancy selection assessment and to explain any extenuating circumstances
• Suggest ways to avoid their redundancy
• Consider any alternative roles you have available
• Address any other matters or concerns that they may have.

Before consulting with employees or dismissing for redundancy, you must be satisfied that there is a redundancy situation. You have a redundancy situation if:

• The entire business is closing
• One or more workplaces are closing or relocating to a new site
• The business no longer needs as many employees to do a particular type of work.

You should also consider:

• How many employees to make redundant and therefore whether you’ll need a collective consultation
• Whether you need to follow any contractual redundancy procedures.

A fair procedure means you must be able to show that redundancy was the real reason for the dismissal, and that you acted reasonably. This usually includes consultation with employees, objective selection criteria, consideration of alternative employment, and proper redundancy payments.

Our solicitors support you through each step, from planning and dialogue to handling payments, agreements, and disputes. We help you uphold the rules and reduce the risk of claims.

Before you can make employees redundant, you must consider:

• Collective consultation
• Individual consultation
• The ‘pool’ of employees you’ll use to choose who to make redundant
• Selection criteria
• Alternative employment.

You’ll need to start collective consultation if you plan to make 20 or more employees redundant at one workplace organisation within a 90-day period.

If you recognise a trade union, this means giving information to, and consulting with trade union representatives. If you don’t recognise a trade union, you can consult with elected employee representatives instead of individual employees.

You’ll also need to file an HR1 form which informs the government about your redundancy plans so they can assist your redundant employees where possible.

There are strict legal requirements when carrying out collective consultation. If you don’t follow these, you may have to pay your employees up to 90 days’ gross pay (each) as a ‘protective award’.

Our specialist employment law team can identify if you need to organise collective consultation and help you follow the rules correctly.

Yes, you should remember to include employees who are absent from the business, for example on long-term sick leave or maternity leave, in the redundancy consultation process.

You should keep them informed of the situation and give them the same information in writing as other employees. You should also keep them actively involved in the consultation process.

Ideally, you should still communicate face-to-face with them. You should try and accommodate requests for flexibility, such as meeting at the employee's home or having meetings outside office hours.

The employee can’t have face-to-face meetings; you should do your best to consult by other means. This could involve consulting by phone, email or letter. You risk claims of discrimination or unfair dismissal if you fail to consult with absent employees.

There are also specific rules for employees on maternity leave. You must offer them alternative employment before any other employees if their roles are redundant or potentially redundant and suitable alternative work is available.

If an employee refuses to attend consultation meetings, you should first try to find out why. Avoid jumping to a negative conclusion and try to have a meeting with them to discuss the situation if possible.

It may be appropriate to carry out the consultation another way, for example in writing. You should consider alternative methods of communication, particularly if an employee has a disability which affects their ability to attend face-to-face consultation meetings.

An employee may refuse to attend due to an alleged shortcoming in the consultation process. If so, you may need to consider addressing that allegation and then inviting the employee to a rearranged meeting.

If an employee continues to refuse to participate then, depending on the circumstances, you may decide to proceed with a meeting in the employee's absence. You should warn them that you’re going to go forward with the meeting, so they have chance to reconsider.

You should accurately record any meeting that goes ahead without the employee and send them a copy of the minutes as part of the on-going process.

A settlement agreement is a written agreement where an employee accepts financial compensation in return for agreeing not to bring any claims against you. It’s only valid if the employee receives legal advice on the agreement.

You can use a settlement agreement if you don’t want to go through a full dismissal process, or you want to avoid possible risks for dismissing someone. You may, for example, not want to go through a formal performance management process before dismissing on capability grounds.

Settlement agreements are also helpful if you’re making any ‘ex gratia’ payments to your employees above your contractual obligations. You can ask employees to sign an agreement when you dismiss them to avoid the risk of a claim later on.

Our team has advised on thousands of settlement agreements. We can help you write an agreement, check an existing one and negotiate the terms of an agreement.