Redundancy Process for Less Than 20 Employees
Redundancy occurs when an employee’s job no longer exists. There are many reasons behind it, including an immediate need to reduce staff in order to keep the business from closing, or if the job role is no longer required. It’s vital that you follow the correct redundancy process to protect the interests of your business and ensure your employees are treated lawfully.
Regardless of the motive, an employee has legal rights. Whether it’s a statutory payment or a consultation and a just notice period. That’s why it’s important that you follow the correct redundancy process, as per the latest legislation and case law for England and Wales.
Avoiding redundancies: compulsory and non-compulsory
Managing redundancies of less than 20 employees
Where redundancies are unavoidable, there are certain steps you need to take to manage the process in line with your duties.
The redundancy process you are required to take will be determined by the number of redundancies you intend to make.
In the case of small-scale redundancies of fewer than 20 employees, the process is as follows:
- Notify the Redundancy Payments Service (RPS) before arranging a consultation with the employee(s) and inform your senior team (if applicable).
- While making less than 20 employees redundant doesn’t require any notice to carry out a consultation process, it’s highly recommended to give those impacted some advanced notice to absorb the information and prepare themselves for the future. You can speak to those affected on a one to one basis or in a group – letting them know why redundancies are necessary and if there are any ways around it.
- Give your employees a certain amount of days to consider the proposed redundancy terms and send over any questions or requests they have.
- Hand out staff termination notices with an agreed leaving date to those affected.
- Once the consultation is complete, issue redundancy notices.
Prior to the consultation process, it’s always best to work with the trade union or workplace representatives to agree on commencement dates. The affected employees can then work with these figureheads to ensure the redundancy process is carried out smoothly and resolved without any disputes.
Any verbal consultation must also be produced in written form for employees to take away. This content should include the reasons for the proposed redundancies, the number of employees affected (with description), how you made your selection, the way in which you are planning to carry out the dismissals with timescales and any payment figures included.
Establishing which employee qualifies for what
Redundancy notice periods and payments are all dependent on the time they’ve spent working for your company.
For instance, the statutory notice periods are:
- A minimum of one week – for staff who have been employed between one month and two years.
- One week of notice for each year of employment – for those who have been employed at your company between two and 12 years.
- 12 weeks of notice – if a staff member has been employed for 12 or more years.
On the other hand, staff who have been employed by your business for less than two years don’t technically qualify for a redundancy payment. However, it’s highly recommended that you reimburse them to avoid any further discontent and legal matters.
If the employee has been with you for at least two years, they are entitled to receive a statutory redundancy payment of:
- 0.5 weeks’ pay for each full year of service – before they reach 22 years old.
- 1 week of pay for each full year of service – in between 22 years old and 41.
- 1.5 weeks of pay for each full year of service – when they surpass 41 years old.
The cap is 20 years, so if an employee has worked for your company for longer, the payment will stop after this period. While the weekly ay-out is capped at £489.
[Redundancy payments are tax-free up to £30k etc – see https://www.gov.uk/staff-redundant/redundancy-pay]
The consequences if you fail to follow the correct process
If you fail to adhere to the redundancy process, or an employee feels like their rights have been breached or ignored, they may make a claim for unfair dismissal to the Employment Tribunal (ET).
If the tribunal finds in the employee’s favour and that you have breached your duties, you may be ordered to pay compensation – otherwise known as a protective award.
All appeals to the Employment Tribunal from staff must be made within 3 months of the dismissal. Subsequently stretching the redundancy process out for a sustained period of time and costing you even more money.