Redundancy – the reasonable test

Before embarking on a redundancy process and dismissal; companies must ensure they have exhausted all avenues including the Coronavirus Job Retention Scheme which has been extended to 31^st March 2021. Where there has been a downturn in business or a need for cost cutting; there may be an alternative to redundancy. 

Employment Rights Act 1996

Despite the current coronavirus crisis companies must ensure they follow a fair and reasonable process when conducting a redundancy process. They must fulfill the reasonable test as outlined in Employment Rights Act s98.

• Employees must given as much warning as possible about any impending redundancies that may be taking effect soon. This is to enable employees to consider alternatives and if necessary, start looking for alternative employment.  
• Companies must ensure they conduct a meaningful consultation period with individual employees, employee representatives or trade unions if applicable in all potential redundancy situations.
• Companies should consider what selection criteria they will follow during the consultation process. Regardless of what option they choose; the company must ensure it is objective and avoid subjectivity / personal opinions in the process. Companies may consider including objective criteria such as attendance levels, employee efficiency, employee work experience and length of service. Where a company uses length of service as part of their selection criteria, they must ensure it is applied fairly and they do not directly or indirectly discriminate based on a protective characteristic.
• The company must apply a fair selection process and a fair selection criteria. Any representations made during the consultation process must be considered carefully and outcome evidenced.   
• Companies must seek to see whether they could offer alternative employment to employees instead of dismissing by reason of redundancy. Again, companies must not directly or indirectly discriminate based on a protected characteristic or make decisions based on their own personal opinions.

For further guidance call Quest on 01455 852028.