Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

The legal price of redundancies

If your organisation is thinking about making redundancies it is important to keep an eye on your legal obligations because any mistakes may prove costly. By Mark Haworth

• In the case of 20 redundancies or more at one establishment, carry out a collective consultation for a minimum of 30 days (90 days if you envisage making 100 or more employees redundant). This will be with a recognised trade union, staff representative body or elected
employee representative.

• If this consultation does not take place or is inadequate, each affected employee can bring a claim in an employment tribunal for up to a maximum of 90 days’ actual pay for each individual.

• Give information to each individual who is at risk of redundancy. Justify your decisions as to who should or should not be made redundant and listen to any representations by the individual. Also make a reasonable effort to identify alternative employment for the redundant employee, or you could face a claim for unfair dismissal.

• If fewer than 20 staff are at risk, you will also need to follow the statutory dismissal procedure. The individual involved must be invited to a meeting by letter and you must make it clear that a possible outcome will be dismissal on grounds of redundancy. Discuss the situation at a meeting and listen to any representations made. Any decision must be provided in writing and be aware that the dismissed employee will have the right to an appeal.

• Seek advice if you consider redundancy of staff who fall into certain categories, such as apprentices and staff on maternity or sick leave.

• Consider seeking volunteers for redundancy to reduce the risk of claims from redundant staff. Be aware that it may be your best staff who will volunteer, as they will be the ones who feel most confident about getting work elsewhere. You should therefore reserve the right to decline any request for voluntary redundancy on the basis that the business needs to retain the skills of that individual.

• Give statutory redundancy pay to employees with at least two years’ continuous employment. Any contractual entitlement to an enhanced redundancy payment will also need to be applied. All staff should receive their contractual notice entitlement.

It is important to follow a fair and reasonable process to reduce the upset caused to your staff and to minimise the risk of successful claims in the employment tribunal. Undertake the process properly and you should be left with a leaner, fitter workforce that is best placed to help the organisation through the current economic difficulties.

Mark Haworth is an associate in the employment department at HBJ Gateley Wareing