This article was published in the January/February 2025 edition of London Business Matters.
The October 2024 Budget has seen businesses forced to weigh up the prospect of increasing employee costs following a rise in national insurance tax and paying higher minimum wages. A survey of recruiters by KPMG and the Recruitment and Employment Confederation (REC), reports that vacancies in the market have fallen at their fastest pace in four years. Simultaneously, we have seen an increase in enquiries from employers considering reducing headcount.
Contemplating Redundancies
If your business is contemplating reducing staff, it is important to demonstrate a genuine redundancy situation that meets the legal definition. This is:
- the business is closing or has already closed;
- there is a change in the types or number of roles needed to do certain work; or
- there is a change in location.
Once a genuine redundancy is identified, it is important to ensure that a fair process is followed to avoid a claim for unfair dismissal. Even for those employees who do not have the requisite 2 years’ service to bring such a claim, employers want to avoid any allegation of discrimination where, for example, it is suggested that prejudicial selection criteria was used to select and employee for redundancy.
As a minimum, a fair process requires a ‘genuine and meaningful’ consultation take place with those employees identified as ‘at risk’ to discuss the reasons for the proposed redundancies, the skills and experience needed going forward and the criteria used for selection. The consultation should include ways in which redundancy might be avoided, such as applications from staff to work flexibly on job shares or on reduced hours or, reducing or prohibiting non-contractual overtime. If any alternative options are not viable, then it is important to explain why this is the case. Employers should consider if any ‘suitable alternative work’ is available, engaging and inviting suggestions from the ‘at risk’ employees.
While there is no strict timeframe within which consultations should be carried out (except in redundancies of 20 or more employees which is beyond the scope of this article), these should take place over a sufficient period to demonstrate a fair and meaningful process.
Redundancies are difficult for everyone involved and a fair and transparent process can avoid ambiguity for employees and the potential of legal claims for employers.
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