There will be times when a business will need to make a role or roles redundant due to one of the following genuine reasons for redundancy:
- When a business, or part of it, shuts down completely.
- When a business shuts down at a specific location (even if moving to a new location).
- The requirement for employees to do work of a particular kind has reduced or ended.
- The work of an employee is being completed by others.
Please see our previous blog on the correct redundancy process to follow if one of the above situations applies to your business. Redundancy – the process to follow and template letters
After Redundancy – the need to re-recruit
Once employment has been terminated by reason of redundancy, if the economic situation suddenly changes and the employer needs to employ someone, it may re-employ the redundant employee.
There is no obligation to wait a certain period before offering re-employment to that individual.
An employee who is re-employed after having been made redundant can retain their statutory redundancy payment, whether they are immediately re-employed or return to work for the same employer at a later date. However, under s.214 of the Employment Rights Act 1996, the receipt of the redundancy payment will break the employee’s continuity of employment for the purposes of the statutory redundancy pay scheme. Therefore, if the employee is made redundant again in the future, they will not be entitled to a statutory redundancy payment until they have accrued another two years’ service. The statutory redundancy pay calculation will be based on the latter period of service only.
Recruiting someone new into a previously redundant position
An employer is also under no obligation to offer the redundant employee their job back; it is entitled to recruit someone else instead.
When assessing whether there was a genuine redundancy situation for the purposes of the fairness of the dismissal, an employment tribunal will look at the entire period from the start of redundancy consultation until the employee’s employment terminates on the ground of redundancy.
If the employer engages someone else in a particular role shortly after making an employee redundant from that role, this may cast doubt on the genuineness of the redundancy should the employee challenge it by bringing an unfair dismissal claim.
In these circumstances, the employer would need to demonstrate that the redundancy situation was still genuine at the time the redundant employee was dismissed, and it was only after that date that its economic position changed.
If the employer does wish to re-employ the redundant employee but also wants to ensure that their continuity of employment is broken by the intervening redundancy, there should be a clear calendar-week break (starting on a Sunday) between the termination of one period of employment and the commencement of the new period.
Any continuity of service that there might otherwise have been will normally be broken, provided that there has been no agreement between the parties to preserve continuity and the new contract makes clear that it is a new period of employment. To err on the side of caution, a minimum two-week break in service would be advisable.
The position is different if the offer of new employment is made before the original employment has ended, i.e. if the employee is given notice of redundancy but, before the employment ends, the employer offers them a new job. In these circumstances, continuity will be preserved if the new job starts no more than four weeks after the redundancy date.