What is the redundancy process for one employee?

As usual, the answer is.. it all depends!

A single employee redundancy could arise either A) if you have only one employee or B) only one redundancy is necessary from the whole workforce or C) the role to be made redundant only has a single post-holder.  We’ll look at each situation below.  However, there are some common factors to be considered first:

Ensure there is a genuine redundancy.

Legally, a redundancy situation exists only where:

  • You shut down a business or part of a business;

  • You shut down at a given location even if you are moving to a new location; or

  • Your need for employees to do work of a particular kind reduces or ends.

 

Don’t be tempted to replace an unsuitable employee using a redundancy process if you are intending to engage someone else to do the same job.  You may think you are doing them a favour but it could lead to an unfair dismissal claim.

Similarly, don’t mistake a TUPE situation (see our other FAQs) for a redundancy.

 

Consult

 

There is always a requirement to consult even if only one person is involved.  The affected individuals must be notified that their job is at risk, advised about the reasons for the proposed redundancy and allowed the opportunity to suggest alternatives to redundancy.  The consultation must be meaningful and this means you will usually need to take at a couple of weeks.

Take all reasonable steps to avoid a redundancy

Can you, for example, terminate a contractor instead or cancel a planned recruitment? 

Identify alternative employment

Not only jobs of similar status/benefits/terms of employment, but also other roles that the displaced employee might wish to consider.

Now, looking at the three scenarios above:

A) You have only one employee:

Redundancy will either result from the business closure or a reduction in business to the point where you as he proprietor don’t need an employee.  Both are legitimate redundancies, but be sure to follow the correct process.

If you lose work because a client cancels a contract and moves the work in house or to another contractor there may be a TUPE situation which would mean the employee transferring to the other contractor or client.

B) Only a single redundancy is necessary from the workforce

In this case, the main challenge will be to fairly select the right person.  The classic error is to choose the person you want to be rid of without a proper selection process.  If the person you had in mind at the outset is the poorest performer in the group affected then a reasonable selection process should come to the same conclusion and legitimise the decision.

Selection should be based on a pre-defined set of criteria which do not unlawfully discriminate (e.g. by selecting a woman because she is due to commence maternity leave).  The criteria should be transparent and shared with the affected workforce.  The criteria should be objective wherever possible.  Vague, unmeasurable or subjective criteria, such as bad work attitude, are always likely to be challenged.  Create a selection matrix and score each candidate.  It is reasonable to take into account length of service but only as one of a set of criteria.

A key first step is to define your criteria by reference to your future requirements.  For example, if the reduction of the workforce is due to the introduction of new technology, you may prefer to retain those that have better tech skills.

C) There is a single affected post-holder

You should still conduct a full consultation so that the reason for the redundancy is properly explained and the post-holder has the opportunity to suggest alternatives.  Again, you should consider alternative posts that might be available.

 

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Redundancy is complex and the process involves several steps, any of which can trip up the unwary and result in a possible unfair dismissal and/or unlawful discrimination and awards of compensation in a Tribunal.

 

Before you make any redundancy decision, even where only one employee is involved, you should:

  • Ensure there is a genuine redundancy

  • Replacing an employee with someone who does essentially the same job may not count as a genuine redundancy.  Does the situation count as a genuine redundancy as defined above?

  • Design an appropriate consultation and selection process

  • Allow reasonable timescales for these steps to be fairly and meaningfully completed.  Ensure that no inadvertent discrimination arises.

  • Correctly identify those affected by the potential redundancy

  • It is essential to correctly identify those who are “at risk” to ensure a fair selection.

  • Take all reasonable steps to avoid a redundancy

  • Redundancy should be considered as the last straw option no other reasonable solution exists.

  • Conduct a meaningful consultation

  • You must communicate your plans and the reasons redundancy is being contemplated and allow employees to offer alternatives whereby compulsory redundancy can be avoided.

  • Identify alternative employment

  • Not only jobs of similar status/benefits/terms of employment, but also other roles that the displaced employee might wish to consider

  • Take appropriate expert advice!

Redundancy should not be lightly undertaken.  Taking professional advice is strongly recommended.