RETAILER’S GUIDE | Handling redundancies

With the current challenges facing retailers, it is expected that employers may continue to reduce their headcounts.

Carrying out redundancies is never a pleasant task, but given the existing climate, it may be inevitable. Redundancies should be handled with care and legal advice should be obtained to minimise the risk of unfair dismissal claims.

Our Employment Law experts highlight some of the key things to consider when making employees redundant.

Are you in a redundancy situation?

Ask yourself the following questions:

  • Are you closing the business in which the employee is employed?
  • Are you closing the place of business where the employee is employed to work?
  • Is there a reduced requirement for employees to carry out work of a particular kind?

If the answer to any of these questions is yes, you are in a potential redundancy situation.

How many people are you making redundant?

In cases of small-scale redundancies (where fewer than 20 staff are to be made redundant over 90 days at one establishment), there are a number of steps to follow to ensure a fair process, including:

  • warning employees of redundancies
  • creating and applying fair and non-discriminatory scoring criteria
  • consulting with employees
  • considering suitable alternative employment options.

In cases of large-scale redundancies (where 20 or more staff are to be made redundant over 90 days at one establishment), you will also need to adhere to collective consultation rules.

 If you are making between 20 and 99 redundancies, you must consult for at least 30 days and if you are making 100 or more redundancies, you must consult for at least 45 days before dismissal. You will need to notify the Department of Business, Innovation and Skills and provide information to employees and representatives about the planned redundancies.

How much do you have to pay employees being made redundant?

Those who have worked for you for two years or more will be entitled to a statutory redundancy payment and the amount they receive will be dependent on their age, pay and length of service.

The employee has the right to be paid as follows:

  • half a week’s pay for each full year if they are under the age of 22
  • one week’s pay for each full year they are 22 or older, but under 41
  • one and half week’s pay for each full year they are 41 or older.

The maximum length of service that will be taken into consideration for the purpose of a statutory redundancy payment is 20 years. In Great Britain, a week’s pay is capped at £508; therefore if they have been made redundant after 6th April 2018, the maximum statutory redundancy pay they will receive is £15,240.

 Some employers may provide their employees with a contractual right to enhanced redundancy payments. This should be paid out in line with what is set out in the employee’s contract of employment or Employee Handbook.   

Are some employees entitled to extra protections? 

You also need to think about whether there are specific rules that affect certain groups of employees. In the case of pregnant employees or those on maternity leave, there are extra protections. For example, you must warn all your employees of a potential redundancy situation, including those who are on maternity leave or off work with a pregnancy-related sickness, and of how it will impact on them.

This is a complex area of law, so contact your Employment Law Adviser who can guide you.