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Redundancies expected to rise further as unemployment reaches an 11 year high

15th November 2008

In the 3 months to September 2008 the number of people out of work rose by 140,000, to a total of 1.82 million. This is the highest unemployment figure for 11 years. October 2008 also witnessed the highest monthly increase in the number of people on Job Seekers Allowance (JSA) since 1992. The total number of people claiming JSA increased to 980,900. The number of people claiming JSA  has increased over 9 consecutive months.
The general secretary of the TUC, Brendan Barber, has said that the signs indicate that redundancies are coming even faster since these figures were collected. There were 156,000 people that reportedly lost their jobs due to redundancy during the three months to September, marking an increase of 29,000 from the previous quarter. Equally worrying is the fact that reported job vacancies fell in the quarter by 40,000 according to the Office for National Statistics. 
These figures highlight the need for employers to ensure that they conduct any redundancy procedures fairly and properly. The failure to do so may lead to claims of unfair dismissal, for which those affected can claim compensation above and beyond the usual statutory redundancy payment entitlement. In addition, a failure to follow the process properly may constitute an “automatic“ unfair dismissal where the employer did not comply with the statutory dismissal procedures- which will remain in force until April 2009.
It is also likely that many people will pursue their employment rights over fair redundancy and unfair dismissal in the Employment Tribunals in order to recover compensation from their former employers. This is particularly likely if the opportunities for alternative employment are thin on the ground.
Employers therefore must ensure that they carry out their redundancy procedures properly and fairly, even if the number of redundancies they are planning is small. The consequences of a failure to act fairly, and within the law, will be that savings resulting from the redundancies may well be lost in Tribunal litigation, and orders for compensation.
We can help employers through their legal obligations by providing them with appropriate support, policies and procedures.
If you have any questions on the issues raised, or need policies and procedures for your business to manage redundancies properly and fairly, do not hesitate to contact us.


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