Businesses and other organizations may find themselves at some stage in a position whwre they have to reduce the number of posts, close down areas of activity, or, in the worst case, cease trading. Where it becomes necessary to make employees redundant it is important that the processes which require to be followed are carried out in accordance with legal requirements for consultation, compensation and fairness.

Redundancy is defined in terms of the work done by an employee no longer being required (or not required in the same location) by an employer. It is not defined in terms of dismissal of individual employees. According to UK law :

 "an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to—
(a)the fact that his employer has ceased or intends to cease—
    (i) to carry on the business for the purposes of which the employee was employed by him, or
    (ii) to carry on that business in the place where the employee was so employed, or
(b)the fact that the requirements of that business—
    (i) for employees to carry out work of a particular kind, or
    (ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer, have ceased or diminished or are expected to cease or diminish..."

If 20 or more employees are to be made redundant in a 90-day period then there is an obligation on the employer to consult fairly with representatives of the employees at least 30 days before the redundancies, and at least 90 days beforehand if 100 or more redundanciea are planned.

Employees are entitled to redundancy pay which must be at least equal to the amounts legally required according to UK Statutory Redundancy payments. Employers may decide to pay enhanced redundancy terms to redundant staff in excess of the statutory amount by voluntary contribution. Redundancy pay is currently tax-free for employees to a limit of £30,000 (See HM Revenue and Customs factsheet here)  An enhanced online redundancy pay calculator for employers and employees is available on Pear Computing Systems website. Click here for a basic online redundancy pay calculator.

Where employees have to be selected for redundancy it is essential that the selection process is even-handed and that best practice is followed, as poor processes may lead to dismissal which is subsequently deemed unfair. It is also important that your selection processes are clear, well managed and can be shown to be fair. Software for integrated redundancy calculators and Redundancy Process Management is available from Pear Computing Systems

Some resources for employers :

Calculators etc :
PEAR COMPUTING SYSTEMS - Redundancy and Redeployment Solutions
BERR (Dept for Business Enterprise and Statutory Reform) Redundancy Pay Calculator

Employment Law :
UK Statute Law Database - Employment Rights Act 1996 (c. 18) Part XI Redundancy payments etc.
emplaw.co.uk Employment Law Guide - Redundancy
Law Society - Redundancy Practice Note - from 19 December 2008

Forms :
The Insolvency Service - Advance Notice of Redundancies - HR1 Form (PDF)

General Resources: 
ACAS Advice - Redundancy
ACAS Advisory booklet - Redundancy handling (Booklet Summary)
BBC News - The Pitfalls of Redundancy
BERR (Department for Business Enterprise and Regulatory Reform) - Redundancy
Chartered Management Institute - Redundancy Support Service
CIPD (Chartered Institute for Personnel and Development) - Redundancy
City Redundancies - Understanding Redundancy
HRM Guide - Redundancy : A Guide for Employers
HR Zone - The cycle of grief: The key to handling redundancy
Labour Relations Agency - Redundancy Q & A
People Management - Employment law at work: Redundancy
Personnel Today - Redundancy Tracker and UK Job Losses
Personnel Today - Redundancy : Top 10 Alternatives (for employers)
Redundancy Help (www.redundancyhelp.co.uk)
Scottish Government - Public Service : Severance, Early Retirement and Redundancy Terms
Takelegaladvice.com - Redundancies: Employment solicitors explain how to avoid litigation

PLEASE NOTE : The information on this site is provided as-is as a focus for resources concerning redundancy issues. We cannot provide any legal or advisory information on specific cases, so please DO NOT contact us for  such advice. If you require further assistance with your own circumstances then you should take professional advice from an appropriate source such as an Employment Lawyer, Trade Union, Citizens Advice Bureau or other agency competent to provide such assistance.