Now that the summer is over, organisations are turning their attention to the productivity of their businesses, in an increasingly competitive landscape.
The recent increase in employer national insurance contributions has raised the cost of employing staff, while advances in technology, most notably artificial intelligence, may be reducing the demand for human labour.
It is unsurprising that, against a backdrop of economic uncertainty, unpredictable growth, and evolving market demands, redundancies are frequently a part of the conversation. Senior leadership teams may then take a commercial decision to reduce headcount. However, there are several pitfalls when managers proceed without a good understanding of the law relating to redundancy, consultation periods and severance pay.
In this article we address some of the most common myths and misconceptions about redundancies.
Many will use the term “redundancy” incorrectly to refer to a “no fault” dismissal of any kind. An organisation may then seek to dismiss an employee with notice in accordance with the provisions in the employment contract and label the dismissal a “redundancy”. However, redundancy has a statutory definition, which is set out in the Employment Rights Act 1996 (“ERA”). An employee is dismissed for redundancy when the dismissal is “wholly or mainly” attributable to the fact that:
a. the employer has ceased or intends to cease to carry on the business for...
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