Individual redundancy

By Tolley in association with Jessica Shemmings at Charles Russell Speechlys LLP
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The following Employment Tax guidance note by Tolley in association with Jessica Shemmings at Charles Russell Speechlys LLP provides comprehensive and up to date tax information covering:

  • Individual redundancy
  • The redundancy process
  • Identify a selection pool of employees at risk of redundancy
  • Identify fair selection criteria
  • Warn and consult
  • Apply the criteria fairly
  • Consult on the selection
  • Alternatives to dismissal
  • Bumping
  • Consider alternative employment
  • Time off to search for alternative employment
  • Appeal process
  • What if the employer fails to consult or follow the appropriate procedural steps?

Note: all case references in this guidance note are subscription sensitive.

An individual redundancy is a dismissal that can be attributed wholly or mainly to a situation in which:

  • the employer has ceased to carry on the business for the purpose of which the employee was employed (ie a business closure) (ERA 1996, s 139(1)(a)(i))
  • the employer has ceased to carry on the business in the place where the employee was employed (ie a workplace closure) (ERA 1996, s 139(1)(a)(ii))
  • the requirement of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where the employee was employed have ceased or diminished (ie reduced requirement for work) (ERA 1996, s 139(1)(b))

‘Ceased’ as well as ‘ceased or diminished’ also includes scenarios in which the employer intends or expects for the business or work carried out to cease or diminish. This permits employers to plan for changes to their business operations and work force in an organised fashion.

If there is an issue about the place where the employee works, this means the place where he works as a matter of fact, not the places where he could have been asked to work under his contract of employment.

ERA 1996, s 139(2); High Table Ltd v Horst and others [1997] IRLR 513

If the employer proposes to make 20 or more employees redundant within a 90 day period, the rules on collective redundancy are also likely to apply, regardless of whether or not such employees are spread across different offices or sites. For further information on collective redundancy, see the Collective redundancy ― overview and Information and consultation in collective redundancy guidance notes.

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