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July 2008

Top Tips for Handling Redundancies

The last couple of months have seen the effects of the credit crunch extend beyond the financial sector as employers have begun to review their staffing levels. Handling redundancies is never easy and there are certainly legal traps for the unwary. This Update is not intended as a comprehensive guide to handling redundancies but will instead highlight some of the things which can be over-looked when dealing with redundancy situations.

Remember it’s the Role that’s redundant not the Person

Where the statutory definition of redundancy is met because an employer requires fewer employees to do work of a particular kind, employers should not automatically jump to the conclusion that the person(s) in that/those role(s) will be the one(s) to be made redundant. Usually other employees across the organisation in similar or equivalent roles should also be put in a ‘pool for selection’ and considered for redundancy as well.

Voluntary or Compulsory?

Before implementing compulsory redundancies, it is recommended that employers invite any employee wishing to volunteer for redundancy to make this known as, if suitable volunteers do put themselves forward, it may be possible to avoid compulsory redundancies.

Collective Consultation?

When beginning what may be the ‘first wave’ of redundancies, employers will need to be mindful of their future plans.

Where 20 or more redundancies are proposed at one establishment within
90 days, the ‘collective consultation’ rules will apply. The Department for Business Enterprise & Regulatory Reform will need to be notified in writing
and the employer will have to consult with appropriate representatives of the employees who may be affected by the proposed redundancies or any measures taken in connection with them. Consultation must begin at least 30 days before the first of the redundancies takes effect (or 90 days before where 100 or more redundancies are proposed).

Alternatives to Redundancy

The need to consider whether any alternative employment exists within the organisation should be considered. Similarly, it is good practice to consider whether there is any scope for retaining the employee on a part-time basis.

Time Off

During their notice period a redundant employee has a statutory right to reasonable time off with pay to look for new employment or make arrangements for training for future employment.


In order protect themselves against the risk of a claim being brought, employers often offer employees enhanced redundancy packages on condition they sign a Compromise Agreement agreeing not to take any legal action against the employer. The Compromise Agreement must be in a form required by the employment legislation and the employee must have received independent legal advice on it from a suitably qualified person before signing the Compromise Agreement.

Be Confident!

Although there are many elements that go towards making a redundancy a fair dismissal, where employers have properly considered the circumstances and have applied fair and objective selection criteria, the business case for the redundancy should be made out and there will be clear reasons why the person(s) selected for redundancy have been. Whilst not every employee will be happy with the situation, increasingly employees are regarding redundancy as part and parcel of modern working life and often see it as an opportunity to move on to something else.

If you have any queries regarding these or any other employment law issues, please contact Paul Lane on 020 7712 1715 or by email

Please note: The content of this Update does not constitute advice and it is not intended to be a comprehensive and definitive statement of the law. Advice should always be taken as to individual circumstances. Please refer to our Terms of Use.


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