How much do you need to justify a redundancy decision?

April 18, 2022
How much do you need to justify a redundancy decision?

Guiding an employer through a redundancy process is one of the worst aspects of working in HR – I remember my first redundancy exercise very clearly, I’d been in HR for only a few weeks at the time and it was pretty awful.

Obviously there are procedural requirements to redundancy, and whilst those do get more specific when it comes to larger-scale redundancies, the fundamental requirement to consult is common regardless of whether it’s one redundancy or thousands. Consultation needs to happen on things like selection criteria, redundancy pools and looking for alternative roles. But to what extent does consultation need to happen (and for it to change anything) on the reasons for redundancies in the first place?

Although when there are larger scale redundancies, there might be disputes about the numbers involved, the fundamental reason isn’t usually particularly controversial. But when it’s very small scale or single redundancies, the proposal to have any redundancies in the first place can generate heated debate.

If the redundancy is because managers feel the role is simply not needed,  employees may comment during consultation that they are very busy therefore their role isn’t redundant. They may argue the employer will not manage without them.

Or if you are restructuring the department and the work, they may have strong views that your proposed new structure won’t work – won’t meet customer demand, won’t get the job done, will be bad for the business, or just isn’t a good idea.

But does that mean it’s not a genuine redundancy situation? There’s a fundamental point that is helpful here, which is that the employer is allowed to make decisions about it conducts business, even if employees think those decisions are ridiculous, make poor commercial sense or will not work.

The definition of redundancy is that the need for employees in that location doing that work has ceased or diminished. But there is no indication anywhere either in legislation or case law that employee and employer have to agree the need for employees doing the work has diminished. If the employer has eight widget makers, they’re all pretty busy, but, perhaps for cost reasons, the employer decides it wants to manage with six instead, that means the employer’s need for employees doing that work has diminished. The quantity of work may not have done, but that isn’t necessary.

The employer may or may not find later on that was a sensible decision, but it is a decision the employer is allowed to make.

Of course that doesn’t mean an employer can claim a redundancy situation exists where it clearly doesn’t and is a sham – “redundancy” as a cover-up for another reason for dismissal is something that comes up in tribunals all the time. The decision has to be a genuine one at the time it is made. But it doesn’t have to be an objectively sensible commercial decision, and the employee doesn’t have to agree that it is a good idea in order for the redundancy to be fair.

If employees object in this way during a redundancy consultation, of course you should encourage managers to examine motives, make sure the decision is genuine, and where an employee has said it won’t work, of course it’s worth exploring that with the managers. But it’s ok to stick to the decision – there is no need to ‘prove’ the employer can manage without, or to be able to objectively demonstrate that work quantity has gone down. An employer is allowed to make decisions about how it conducts business, and how many employees it thinks it needs.

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