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Redundancy – be clear on your reasons

Published On: June 19th, 2023By

If you’re considering making redundancies, you need to be clear on your reasons. If you’re unable to explain clearly why there was a redundancy situation, you’ll be exposed to unfair dismissal claims of up to a year’s pay for each redundant employee.

Here’s what you need to know:

Focus on business needs – consider business priorities, whether annual plans are on track and if not, how they need to be adjusted. Is there reducing demand, do particular roles need reshaping or are they no longer affordable? A tribunal will check whether your reasons for change were genuine, or whether you’re dismissing for another reason (e.g. poor performance) but disguising the dismissal as redundancy.

Record your reasons – you’ll need to be able to show your reasons for redundancy at the time you made the decision. Save spreadsheets, business plans, sales figures, and anything else that shows your thinking at the time.

TUPE – if your reason for the change is outsourcing, you’ll need to take advice on whether you’re creating a TUPE transfer. However genuine your reasons, if outsourcing creates a TUPE transfer you’ll need to take extra care when making redundancies as employees subject to TUPE transfers are afforded enhanced employment law protection.

The safest option is to take advice before communicating your reasons. Intelligent Employment is here to help with individual redundancies and we have solutions for collective consultation processes too.

This update is accurate on the date it was published, but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.