One in five employers facing up to the possibility of making redundancies

A Cheshire-based employment lawyer is urging employers to seek advice before making redundancies, after a survey revealed that one in five businesses are likely to make cuts to staffing levels over the next year.

More than 1,000 senior decision makers took part in the Advisory, Conciliation and Arbitration Service (ACAS) commissioned survey carried out by YouGov, the international research data and analytics group.

And 18 per cent of those that answered confirmed that they are likely to make redundancies in the next 12 months. Some 72 per cent said they were unlikely to make redundancies, while 10 per cent do not know.

Latham Parry, managing partner and employment law specialist at Watsons, said: “National and global events such as Brexit and Covid-19 have clearly made life tough for some businesses. The knock-on effects of the war in Ukraine are adding further complications.

“The number of companies likely to make redundancies highlights just how difficult people are finding it at the moment. 

“With the rise in inflation and the increasing cost of living, job security is all the more important for the individual employees, who are perhaps more likely to take steps to enforce their legal rights if they have been breached.

“Employers would be wise to take legal advice before rushing into any decisions, otherwise it could prove costly.”

YouGov also split the figures between large businesses that employ more than 250 employees and small and medium businesses (SMEs) with staff numbers between one and 249.

Of the 427 individuals from large businesses, 30 per cent are likely to make redundancies, while only 10 per cent of SMEs planned to do likewise.

Latham said: “Employers should check that there is a genuine redundancy situation which falls within one of the legal definitions of redundancy. A fair procedure should then be followed.”

This typically involves a number of stages:

• Warning employees and consulting with them (or, in some cases, their representatives)
• Having a fair basis for selection
• Considering alternative employment
• Giving the opportunity to appeal against the decision

Should a fair process not be followed, employers are likely to be hit with claims for unfair dismissal if the person made redundant has been employed for at least two years.

Selection and decisions should not be discriminatory (for example, they should not be based on age, or pregnancy, or gender etc), otherwise an additional discrimination claim is likely to be brought.

Employers should be aware of the cost of making redundancies. Anyone who has been employed for two years or more will be entitled to a statutory redundancy payment. Employees may also have a contractual right to redundancy pay.

Employees will be entitled to receive notice of the termination of their employment and pay during their notice period.

Latham said: “Employers should also be conscious of the number of proposed redundancies.

“Those bigger companies proposing to make redundant 20 or more employees will have additional obligations. As well as having to inform and consult appropriate representative, there is a legal requirement to notify the Secretary of State for Business, Energy, and Industrial Strategy. 

“The law also provides for minimum collective consultation periods (at least 30 days where 20 or more dismissals are proposed in a 90-day period, or 45 days where there are 100 or more).

“If these collective consultation requirements are not met, employees can bring a claim in the employment tribunal for a ‘protective award’ of up to 13 weeks’ wages.”

Watsons Solicitors, which has been established for more than 60 years, specialises in family law, employment law, wills and probate, and conveyancing.

The team of experienced solicitors holds various accreditations and memberships of professional bodies relevant to their expertise, while the firm’s partners oversee all areas of work.