Redundancy for employees and businesses
With the job retention scheme moving into its final stage, business owners are beginning to try to work out what their business will look like post lockdown. The most significant part of this is looking at the number of employees and the roles that the business needs.
This is an emotionally difficult process, especially in smaller businesses where hierarchies are blurred. The phrase ‘it’s not personal, it’s business’ rings true.
This article will discuss redundancy, when it might be necessary to start the process and what happens for both businesses and employees.
Redundancy is a form of dismissal. It happens when employers need to reduce their workforce in order to ensure that the business survives.
Your rights as an employee
If you’re being made redundant, you may be eligible for:
- redundancy pay
- a notice period
- a consultation with your employer
- the option to move into a different job
- time off to find a new job
More information can be found here https://www.gov.uk/redundancy-your-rights
If your employer is insolvent, you are likely to be entitled to different things, depending on whether your employer:
- makes you redundant
- asks you to keep working
- transfers you to a new employer (if the business has been sold)
Your employer must implement a consultation process with the workforce, explain why redundancies are proposed and whether there are any alternatives. However, the employer does not have to consult you directly.
More information can be found here https://www.gov.uk/your-rights-if-your-employer-is-insolvent/your-rights
There are many free advice services that can help you to understand your specific situation and resources that can also help in working out what you may be entitled to.
Citizens Advice Bureaux are located across the country. Visit the website to fine your local branch.
Citizens Advice Bureau: https://www.citizensadvice.org.uk/
Citizens Advice on redundancy https://www.citizensadvice.org.uk/work/leaving-a-job/redundancy/check-if-your-redundancy-is-fair/
Redundancy for business owners
A business owner will make staff redundant when their role becomes unnecessary or the business no longer needs that role to carry out its trade.
This might be because your business is:
- changing what it does
- doing things in a different way, for example using new machinery
- changing location or closing down
- Downsizing to reduce costs
There are strict procedures that must be followed in the event of a redundancy process. You must be able to demonstrate that the employee’s job will no longer exist.
You must select candidates for redundancy in a fair way, for example because of the level of experience or capability to do the job. You cannot select candidates because of age, gender, disability or pregnancy. Failure to follow the correct procedure may result in a claim for unfair dismissal along with damages and the associated costs.
Commonly used methods of selecting candidates for redundancy might include:
- last in, first out (employees with the shortest length of service are selected first)
- asking for volunteers (self selection)
- a review of disciplinary records
- staff appraisal markings, skills, qualifications and experience
Redundancies can also be shown to be needed if the job no longer exists for example if you are closing down an entire operation or if someone is the only employee in your part of the organisation
Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.
Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.
For more information go to https://www.gov.uk/staff-redundant
The most important thing to remember however, is to consult with an employment expert or lawyer before you do anything.
What is IR35 and does it apply to you?
IR35 describes two sets of legislation that HMRC has designed to combat what they consider to be tax avoidance by workers and the firms hiring them. HMRC maintains that these workers supplying their services to clients via an intermediary such as a limited company, are actually employees and so should be taxed as such
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