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In order to successfully conduct a redundancy exercise you need to:

• Show there is a genuine redundancy situation
• Consult with the affected employees
• Ensure there is fair selection

Generally speaking, redundancy is used to describe a situation in which an employer decides to reduce the number of its employees, either within the business as a whole, or within a particular site, business unit, function or job role. An employer may decide to make redundancies for a variety of reasons, including recession or other economic pressures requiring business closure or reduction in staff number, changes in the nature of products/services offered, internal reorganisations, relocation of business, etc. The reason for the proposed redundancies will not be challenged and the employer will simple have to justify that the actual reason conformed to the statutory definition of a redundancy.

The legal framework is as follows: according to Section 139 of the Employment Rights Act 1996, a redundancy situation can only occur in one of the following circumstances:

1. Business closure – where the whole of the employer’s business is closed
2. Workplace closure – closure or relocation of one or more sites
3. Diminished requirement for employees to carry out work of a particular kind.

Whilst the first two reasons are reasonably straightforward, it is the third reason that will be used most commonly and also the one that brings the most challenges.

Examples of when there is a diminishing responsibility to do work of a particular kind are:

• There is the same amount of a particular kind of work but fewer employees are needed to do it. This would generally be seen as the "classic" situation in which the employer decides to make better use of its resources. This will also include consolidating some of its jobs (e.g. spreading out the work that is affected amongst existing employees)
• There is less work of a particular kind and fewer employees are needed to do it (both the work and the headcount shrink)
• There is less work of a particular kind, but the same number of employees are required overall.

Once you have identified a potential redundancy situation, you need to choose who is to be potentially made redundant. You then place them at risk of redundancy and consult with them over the proposed redundancies. You have a duty to try and find them suitable alternative employment within the company but if that is not possible they may eventually be made redundant.

Finally, you issue them with formal notice of redundancy.

The above is an overview and covers the most important aspects. There is a useful toolkit available for employer, which you can refer to for more details:

http://www.pers.org.uk/Publications/redundancytoolkit.pdf

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