What Are Fair Reasons for Redundancy?

Redundancy can arise in a variety of situations, but to avoid unfair dismissal allegations employers must make sure the reasons for making an employee redundant are legitimate and are not based on any automatically unfair selection criteria.

In this article, we explore the fair reasons for redundancy as well as the considerations employers must bear in mind when making furloughed staff redundant.

Situations Where Redundancy Might Occur

Redundancy can only be considered an option if the employee’s job is no longer needed, which can be attributed to a number of different situations.

Some of the situations where redundancy is necessary include the following.

The Work is No Longer Needed

A worker may be made redundant if the business is still in operation, but the work undertaken by them is no longer required because of reduced demand or the skill the employee was hired for is no longer required.

New Processes Have Been Introduced

If new systems or technology has been introduced that mean the employees job is no longer necessary, redundancy is a viable option. However, the introduction of new processes does not automatically require a worker to be made redundant.

Other Employees Are Completing the Work

Another situation workers might be made redundant is if the work typically undertaken by them still needs to be carried out but is now being completed by others – meaning the employee’s job is no longer required.

The Business is Closing

One of the most common situations where redundancy occurs tends to be when businesses close – either in part or in full.

The Business is Relocating

If a business relocates or plans to relocate to a location that is outside of the specific area that the employee was employed in, redundancy can be considered.

Fair Reasons for Redundancy

The reasons for selecting employees to be made redundant have to be fair and genuine, legitimate reasons for redundancy include:

  1. Attendance history and punctuality
  2. Skill and experience level
  3. Performance history
  4. Disciplinary records
  5. Length of service

It’s worth noting that whilst the amount of time an employee has worked for an employer can be considered as criteria for redundancy, employers should not use this as the only deciding factor. Last in, first out policies can be considered age discrimination if they impact younger employees disproportionately.

In a similar respect, an employee’s qualifications can be considered but should not be used as the sole deciding factor in their selection for redundancy.

In the case of attendance history and punctuality as a reason for redundancy, employers must take care to avoid discrimination against disabled employees.

Employers must be able to explain and justify their reasons for making an employee redundant or they could lodge an appeal or bring an employment tribunal claim for unfair dismissal or discrimination.

With this in mind, it’s imperative that employers act in a fair, objective, and consistent manner, ensuring all decisions are made using written evidence such as sickness records, performance reports and disciplinary records and that all employees are judged by the same standards.

It’s also best practice to have a minimum of two people deciding how each employee ranks against the selected criteria, these people should know each employee and their work too.

Automatically Unfair Reasons for Redundancy

Redundancy can be considered automatically unfair if the employee is selected in part or full for any of the following reasons, despite how long they’ve been employed.

  • They asserted their rights as a worker (such as asking for maternity leave or minimum wage)
  • They took action about health and safety concerns
  • They’re a whistle-blower and have reported the employer for breaking the law
  • They work part time or are on a fixed term contract
  • They work in a shop and refuse to work on a Sunday
  • They are part of a trade union and have been involved in an official strike
  • They have been absent due to jury service commitments

These are what is referred to as automatically unfair reasons. Employees can still legally be made redundant in these situations as long as it isn’t the driving factor behind the redundancy, so to be considered unfair it must be proven that one of the reasons listed is the considered a reason for selecting the employee for redundancy.

Furlough and Redundancy

Set to end on the 30th of September 2021, the Coronavirus Job Retention Scheme (or furlough scheme) has helped businesses support their employees throughout the economic hardships caused by the pandemic and resulting social distancing measures.

As the furlough scheme comes to a close, employees who have been made redundant whilst receiving furlough pay may be wondering what their rights are.

Firstly, furloughed staff cannot be selected for redundancy purely because they are on furlough. If they are made redundant, furloughed employees are entitled to their full pay during their notice period, regardless of whether they received reduced pay at any point whilst on the scheme.

As they are still employed, furloughed staff have the same legal rights as any other employees, so the same reasons apply for fair redundancy, and workers remain protected under the law against discrimination and unfair dismissal.

As a precaution, employers should consider all other alternatives before opting to make furloughed workers redundant or those who have worked for the business for more than two years could present unfair dismissal claims.

Redundancy Support with Caversham Solicitors

Employment law is becoming more accessible than ever before, which means employees are likely to spot when employers don’t handle the redundancy process properly.

If your business is considering making redundancies or has already begun the redundancy process, our employment law specialists here at Caversham Solicitors can ensure the correct procedures are applied to avoid unfair dismissal or discrimination claims.

Our expertise can also help businesses navigate making furloughed staff redundant.

Get in touch with us today to book an appointment or request a call back.