Last In, First Out
In difficult economic times many employers find themselves having to consider reducing their workforce
In difficult economic times many employers find themselves having to consider reducing their workforce
in order that their business remains economically viable. This is often a hard decision to make, especially where the employer has invested time and money in training a skilled and experienced workforce and where that workforce are hardworking and loyal.
Redundancy is a way of legally terminating the employment of an employee who then has entitlement to statutory redundancy payments or to enhanced payments in agreement with the employer. However, without careful thought and planning an employer who is faced with making employees redundant may find that he is nonetheless facing a claim for unfair dismissal if correct procedures and processes have not been observed. For example, there is a requirement that the employer fairly selects which employees are to be made redundant; last in first out is not always an inherently fair way of selecting employees.
An employer will have acted reasonably if he has warned his workforce of impending redundancies and given them the opportunity to consider whether there are alternatives such as reducing working hours, cutting rates of pay or voluntary redundancies. Where Trades Unions are represented in the workforce they must be consulted and where there is a significant workforce but no Trades Union representation, representative bodies should be convened for the consultation process. The employer should also consider alternative employment where it is appropriate to do so.
If the employer gets any aspect of the redundancy procedure wrong he may find that the employee or employees bring claims for unfair dismissal. The compensation awards for unfair dismissal are significantly higher than redundancy payments and the employer may also have to pay his legal adviser to advise on and deal with the claim. It usually works out much cheaper for the employer to take legal advice on the redundancy process before he take any steps, than to pay the financial consequences of unfair dismissal claims.