Law guide: Employment

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Employer obligations

Employer obligations

Contents

Selection for redundancy

Fair selection is of critical importance and needs great care. Objective criteria should be used when determining which employees are to be selected for redundancy. If you have well-established or agreed procedures for selection, they must be carefully observed, provided they are reasonable.

The pool for selection

Employers have a reasonable degree of flexibility when deciding which 'pool' or group of employees should be targeted for proposed redundancies. The pool of employees should be as wide as possible to avoid claims for unfair dismissal on the grounds that an employee who was omitted from the pool should have been dismissed instead of the chosen employee.

In cases of collective redundancies (Consultation before redundancy), the selection pool should be discussed and agreed with the employees' representatives before being applied.

When choosing which employees should be included within the pool, you should consider:

  • Whether other groups of employees in the business perform a similar role - this may include employees at other sites or parts of the business, and if so, they should be included in the pool
  • Employees whose roles are interchangeable with the roles performed by the employees in the pool
  • If the role or position of the employee is consistent with the roles/work performed by the employees included within the pool.

The selection criteria

The selection criteria is the basis upon which employees who are at risk of redundancy will be scored in order to decide which of them will be made redundant.

When creating the selection criteria, subjective factors or personal opinions should not be used. Instead, an employer should, as far as possible, use objective factors that are relevant to the needs of the business and which can be verified using available records and information such as performance appraisals and attendance records.

In cases of collective redundancies (Consultation before redundancy), the selection criteria should be discussed and agreed with the employees' representatives before being applied.

You should avoid:

  • Including trade union membership as part of the selection criteria as this will make the eventual dismissal automatically unfair
  • Selecting employees on the basis of 'last in, first out' as this is likely to breach age discrimination laws. It may be possible to use this selection criterion provided it is not the only one or if all other selection criteria have been applied and a stalemate situation arises. You should obtain legal advice before applying this criteria
  • Using the amount of salary earned by an employee as a factor for the selection criteria as this is likely to indirectly breach age discrimination laws
  • Applying the performance of the employee as part of the selection criteria if you do not have any records which can be used to support it or if the performance has been measured solely using subjective measures
  • Applying any absences due to maternity leave, paternity leave or because of the disability of the employee or one of their dependants if attendance forms part of the selection criteria (A note should be made that this has been excluded when considering the employee's score.)
  • Applying any absences due to injuries suffered at work, unless you can show that this has been consistently applied to all employees, if attendance forms part of the selection criteria (A note should be made of that this has been excluded when considering the employee's score.)
  • Discriminating, whether directly or indirectly, against employees on the grounds of age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, sex, sexual orientation and/or religion or belief (England, Wales and Scotland) or religious belief or political opinion (Northern Ireland)

The burden of proof will rest upon an employer to show that their selection criteria were fair.

Further information can be obtained from the Gov.uk website.

Obligation to explore possible alternative work

There is a legal obligation to explore thoroughly whether there are any suitable alternative jobs which can be offered to redundant employees, either within the business or any associated business (including subsidiaries and parts of the business located on other sites).

Whilst there is no obligation to create a new job, a reasonable employer might be expected to make minor changes to an existing vacancy, if these would make it suitable or acceptable to a redundant employee.

You should also consider whether the redundant employee is prepared to be demoted or accept a job at a lower grade/status in order to remain in employment. Do not assume that the employee will not accept this. Also, you may wish to consider 'bumping' (Types of redundancy).

Note that employees on maternity leave and paternity leave have a legal right to be prioritised (without partaking in competitive interviews) for any suitable alternative jobs ahead of other employees chosen for redundancy.

If an employee unreasonably refuses an offer of suitable alternative work, he/she may forfeit his/her right to a redundancy payment.

If the vacancy is lower paid and/or of lower status but within the employee's competence, they should still be offered it as alternatives to redundancy. In such cases, the employee should be told that he/she will not lose the right to redundancy pay if the offers are refused.

An employee who accepts an offer of alternative work is entitled to take the job on a trial basis. They may still be entitled to claim a redundancy payment if during the first four weeks in the new job, he/she resigns on the grounds that it is unsuitable.

Time off

Employees with two years' service who are under notice of dismissal because of redundancy are entitled to reasonable time off from work, either to look for new employment or make arrangements for training. They are also entitled to be paid their normal hourly rate for such time off, up to an amount not exceeding 40% of a week's pay for the whole notice period. You should check the employee's contract or the staff handbook in case they are entitled to enhanced payments or time off for other reasons, with or without pay.

Notifying the government

In any circumstances where 20 or more employees are to be made redundant, you must notify the Redundancy Payments Service (a department of the Insolvency Service) in England and Wales and Scotland, or the Department of the Economy in Northern Ireland, using form HR1.

For England, Wales and Scotland form HR 1 can be downloaded here.

For Northern Ireland, form HR 1 can be downloaded here.

This must be sent:

  • For between 20 to 99 redundancies - at least 30 days before the first dismissal takes place
  • For 100 or more redundancies - at least 45 days (or 90 days for employers in Northern Ireland) before the first dismissal takes place

Failing to provide the notice is a criminal offence which could result in a fine of up to £5,000.

Notice

The redundant employee who is dismissed is entitled to his/her proper notice or pay in lieu of notice (as may be set out in their contract of employment), in addition to any redundancy pay.

If the employee does not have a contract of employment, or if the contract does not state the notice period to be given by the employer, then the following statutory minimum periods of notice which will apply:

  • To the employees with under 1 month's continuous service - no notice requirement
  • To employees with 1 month or more continuous service - 1 week
  • To employees with at least 2 years' continuous service - 2 weeks and 1 additional week for each additional complete year of service up to a maximum of 12 weeks for 12 years or more of continuous service

Employees are also entitled to be paid for any untaken holiday entitlement.