Understanding Redundancy Selection Criteria: Business Owners' FAQs

Question: If the redundancy due to insolvency involves over 100 people, does the redundancy consultation period still need to be 45 days? If the 45-day redundancy consultation period cannot be met, is it the insolvency practitioner (IP) who would be liable or the employer?

For redundancies involving over 20 positions at a single establishment in 90 days, the following collective consultation rules apply:

• 20–99 dismissals: a 30-day consultation period is required before any dismissals occur.
• 100+ dismissals; a 45-day consultation period is required before any dismissals occur.

It will depend on the type of insolvency as to how employment contracts are terminated and who is responsible for any potential legal disputes, i.e., the insolvent employer and/or the IP. However, the rules regarding collective consultation periods will still apply. Insolvency can occur suddenly, and in cases such as this, an employment tribunal will weigh whether it was reasonable for the employer to have complied with collective consultation rules or not.

If the employer could not reasonably have complied with the rules, they may be able to enter a ‘special circumstances defence’. It’s important to note that insolvency will not be a defence for non-compliance in and of itself, and employers can face a protective award in cases where they fail to consult. This award can be up to 90 days’ pay for each affected employee.

If you need to contemplate redundancies in the future, contact Avensure as soon as possible. We can advise you of your legal responsibilities and help you plan your timescales.

Question: If a staff member has been absent due to sickness for over 3 months and their role is being absorbed by other staff, could we make the role redundant?

It is perfectly acceptable for the employer to cover a role temporarily while someone is absent; this can also include employing temporary cover. However, if the role is still there, it is not a fair redundancy. If the postholder was made redundant under these circumstances, had over two years’ service, or was absent for a disability-related reason, a redundancy dismissal may expose the employer to the risk of a claim.

Instead, the employer should tackle the absence via the medical capability route, i.e., establishing if a return to work is likely in the foreseeable future. This may involve obtaining permission from the employee for some medical reason as to their current absence, such as a medical report or occupational health referral. If a return to work is not likely, the employer may be in a position to terminate employment on the grounds of ill health (medical capability).

Please see our article here on managing sickness absence for more information:

Question: Is it lawful to use absence or attendance as selection criteria for redundancy, and if so, would you use each day as an absence period, or, if they have had multiple absences of several days, would each period be counted as one absence? 

Selection criteria decide which employees enter the redundancy selection pool when a group of employees at risk of redundancy carry out the same or similar role. They ensure that the redundancy process is carried out fairly and that employees are not selected for redundancy for discriminatory or unfair reasons.

They can include criteria such as skills, qualifications, length of service, and disciplinary records. The key is to use criteria that can be measured or robustly justified if challenged, so avoid redundancy selection criteria such as reliability, flexibility, or attitude.

If you use sickness absence as a selection criterion, use the total number of days of absence in a rolling 12-month period. However, you may choose to use periods of absence instead.

Ensure that no pregnancy or disability-related periods of absence are included.

Question: Would a redundancy selection matrix be required if we have a single post-redundancy due to costs? 

If the post at the risk of redundancy is genuinely a single post, i.e., there are no other roles in the organisation that are the same or similar, there would be no requirement to carry out a selection process unless the employee expressed a wish to be considered for another role in the organisation (perhaps a role they have carried out previously). Under these circumstances, this may require others to be placed at risk to enable a fair selection process for redundancy.

For example, a sales team of five has one team leader position. The company can save costs by removing the team leader role and having a director manage the sales team. Chances are the team leader was once a member of the sales team. If they expressed a wish to return to their old role, the sales team may be at risk, and a selection process may need to be carried out.

Question: If we were to make an individual redundant because the role was not needed based on the current business requirements, but in, say, three months, things change, and we realise we do need that role…

A. Is that an unfair dismissal?

B. Would we need to hire the same person back (assuming they still want a job)? 

C. Can we find someone new?

A. As long as the role was legitimately redundant at the point of dismissal, you carried out a redundancy consultation and considered all reasonable means of avoiding the redundancy; this is not likely to amount to unfair dismissal and re-employing after redundancy shouldn’t become an issue. If, however, the redundancy is something of a sham exercise, i.e., the employer knew there was a likelihood they would need to re-recruit at the point of dismissal, this could result in an unfair dismissal, regardless of how fair the procedure was.

B. An employee has three months (less one day) following the date of their dismissal to bring a claim for unfair dismissal. Therefore, it’s advisable to inform the employee made redundant that you are looking to re-hire them for the redundant role.

C. Re-employing after redundancy will be fine if the ex-employee doesn’t want their job back, and you must fill the role.

Question: If a small salon with 4 stylists and 1 receptionist can no longer sustain the receptionist’s role or wages, do we have grounds to make the receptionist role redundant? 

Question: If a service has to be reduced due to a lack of finances and a very small team consisting of operational staff and one team leader, Do we need a redundancy selection pool for all employees, or can we make operational staff redundant and keep the team leader?

The redundancy pool will depend on whether there is any cross-over of duties. It may be that the team leader role is more specialised, and those who report to them do not have the skill set to carry out the role; in this case, it may be acceptable to place only the operational staff at risk of redundancy.

However, if the team leader has been with the company for less than two years, you may need to consider whether ‘bumping’ is necessary. Bumping, or a transferred redundancy, is where the employment of a longer-serving employee is protected by removing (or bumping) someone from the post who has been with the company for a short amount of time and whose role is offered to the longer-serving employee at risk of redundancy.

This doesn’t mean, however, that someone should be placed in an unsuitable role; instead, consideration should be given to whether they can retrain to carry out the role within a reasonable timeframe and at a reasonable cost.