Redundancy

EXAM CHECKLIST

To be entitled to a redundancy payment, the e/e must, within 6 months of the date of dismissal

(s164 ERA 1996):

i. give the e/er written notice of the claim; or

ii. refer the claim to the ET; or

iii. have presented a complaint of UD to the ET (this will have had to be done within

3 months of the EDT)

Effective Date of Termination (EDT) RB 59

The complaint must be presented to the ET within 3 months beginning with the effective date

of termination (EDT). For Redundancy, the EDT is called the “relevant date”

Principle – continuity of employment ends on the EDT which is usually the last day

of work or garden leave

– need to know when your continuity ends to see if you’ve got enough time in

to claim.

– HR departments check how long e/es have been there and sack using UD if

e/ee has less than 12 months

– If an e/ee receives short notice or PILON he can extend his EDT by the

STATUTORY minimum period (and not contract period) to try and get his

time in to allow him to claim

– If constructive dismissal, you can only extend for UD and not for R

Extending the EDT The EDT is defined by s97ERA 1996 and cannot be extended if the e/ee did

not receive the statutory minimum period of notice. The ET may extend the

3 month period if it considers that it was not reasonably practicable for the

complaint to be presented within 3 months, but in practice it rarely does so

(s111 ERA 1996).

Examples

i. M has worked for 5 years, she’s dismissed on 5 th Jan and given 4 weeks’

notice and paid in lieu. Start point for EDT is last day she worked (5 th

Jan) – she only needs to extend if she is getting close to 6 years in (to

get higher award). She could extend by STAT minimum of 5 weeks.

ii. M will have worked for 1 year on 11 th Jan but is dismissed on 5 th Jan and

given contractual 5 weeks’ notice and paid in lieu. She can only extend

by the STAT minimum of 1 week which is OK for UD as it takes her EDT

to 12 th Jan and therefore 12 months service.

M resigns on 10 th Jan and claims UD and R. She would have been employed 2 years on 14 th Jan.

UD is not a problem, she could have extended by the STAT minimum but no need as she can

claim as she has 12 months. She cannot claim for R as she does not have 2 years in and cannot

extend (as constructive dismissal)

1 IS THE EMPLOYEE ELIGIBLE ?:

i. employee ?

2

ii. aged between 20-65 years (or below ‘normal’ retirement age if there is one

and it is under 65) ?

iii. 2 years continuous service ?

2 HAS THE EMPLOYEE BEEN DISMISSED ?

i. actual ? ie, you’re sacked

ii. constructive ? ie, a fundamental change of terms and conditions of

employment without the individual’s consent (pay

reduced, hours/place of work changed, role, specific

title)

3 WAS THE DISMISSAL BY REASON OF REDUNDANCY ? which is it ?

The definition of redundancy is contained in s 139(1) of the ERA 1996:

‘ For the purposes of this Act an employee who is dismissed shall be taken to be

dismissed by reason of redundancy if the dismissal is wholly or mainly

attributable to—

(a) the fact that his employer has ceased or intends to cease –

(i) to carry on the business for the purposes of which the employee was

employed by him; or

(ii) to carry on that business in the place where the employee was so

employed; or

(b) the fact that the requirements of that business –

(i) for employees to carry out work of a particular kind; or

(ii) for employees to carry out work of a particular kind in the place

where the employee was employed by the employer, have ceased or

diminished or are expected to cease or diminish.’

Looking at this definition, it can be seen that redundancy occurs in three main

situations: job redundancy, place of work redundancy and employee redundancy.

i. job redundancy – ie, business goes bust

Bass Leisure v Thomas (1994): theTest

if there is a mobility clause, the test is whether the e/er ceased

operations at the place where the e/ee was in fact employed and

NOT any place where e/ee might lawfully be sent under his

contract

ii. place of work redundancy – ie, relocated

Hightable v Hurst (1997):

Agreed with Bass but suggested that where e/ee had a mobility

clause and was told to move by e/er cos of reduction in work

where they were actually working, any refusal by e/ee may be a

valid reason for dismissal due to gross misconduct

iii. employee redundancy – known as “bumping” or re-shuffle

– use 3 stage test from Safeway v Burrell (1997) in the EAT

i) was there a dismissal ?

ii) if yes to (i) have the requirements of the business for e/ees to

carry out ‘work of a particular kind’ ceased or diminished ?

iii) was the dismissal at (i) caused by (ii) ? if yes it is a redundancy

situation

4 DID E/ER OFFER SUITABLE ALTERNATIVE EMPLOYMENT OR OLD JOB BACK ?

3

2 stage test:

i. offer made: made by e/er ?

before the end of the contract ?

to commence within 4 weeks ?

e/ee has a 4 week stat trial period to try out the new job (see

below)

5 DID THE E/EE UNREASONABLY REFUSE THE OFFER OR UNREASONABLY

TERMINATE DURING THE TRIAL PERIOD ?

ii. is the offer suitable ?

1 st = BURDEN – it is for the e/er to show his offer was reasonable and

if the e/ee refuses, it is still on the e/er to show e/ees

refusal was unreasonable

2 stage test:

e/er = objective test: is it reasonable ? is it same pay,

benefits, status, responsibility, hours, prospects,

promotion

e/ee = subjective test: is it reasonable/unreasonable in circs to

refuse to accept the offer?

does it involve a move which e/ee

cannot comply with ? ie e/ee has an

elderly parent to look after, will it affect

e/ee’s ability to pay the mgage…..

Practical Issues for E/ee: – take alternative job but ask for

different hours, pay, etc

Statutory trial Period – he can agree to do the new role under

4 week stat trial period to see if it will

work and if it doesn’t he can still resign

claiming redundancy – PLUS he doesn’t

have to tell e/er he is going on the stat

trial period !

6 COMPENSATION

dependent on age: i. 1.5 gross weeks pay for each complete year of

continuous employment during which the e/ee

was aged 41 or over

ii. 1 weeks gross pay for each earlier complete

year during which the e/ee was aged 22 or over

iii. ½ week’s gross pay for each earlier complete

year during which the e/ee was aged 18 or over

REMEMBER – week’s gross pay is subject to a maximum of E270 for

dismissals on or after 1.2.04

– claim is for a maximum of 20 years

– maximum award of £8,100 for dismissals on or after 1.2.04 (ie,

£270 x 1.5 x 20 = £8100)

6 General points

E/er should always give as much warning as possible.

4

Need a fair selection process to decide who goes – look at performance, time keeping, etc

Nowadays, cant really use “last in 1 st out” policy….

Must involve a fair method of selection based on objective criteria and apply these fairly

Must involve consultation with e/ees affected and any recognized trade unions

Wherever possible, try and offer an e/ee re-engagement – Visit Abogados de accidentes today