Changes in farming businesses can result in staff redundancies being unavoidable. This isn’t a pleasant process for anybody involved but this guide aims to provide you with a checklist to follow to manage the process appropriately.
In what situations is redundancy appropriate?
Redundancy is a form of dismissal for when a role is no longer needed. In agricultural, the reasons for a role no longer being required include:
- Closure of the farming business potentially related to struggling finances or retirement.
- A change to the scale of a particular enterprise such as reducing sheep numbers.
- Removing an enterprise altogether, meaning an employee is no longer needed.
Poor employee performance or conduct is not a suitable reason for redundancy. Where this occurs, a business should follow a disciplinary or dismissal procedure.
The key question to ask yourself to confirm that it is a redundancy situation is: Am I needing to let somebody go because I have a reduced need for labour?
There is a process that needs to be followed to ensure that all employees are treated fairly, and any claims of unfair dismissal are prevented. The process is much simpler in situations where there is only one employee or the business gets rid of the sheep enterprise, as it becomes clear that it should be the shepherd or shepherdess that is made redundant. However, where there are multiple employees in similar roles, they will all need to be placed in the selection pool for possible redundancy. For those with only one employee or a clearly defined person that is to be made redundant, not every step in the process listed below will apply.
Step 1 - Ensure redundancy is the only option
Before committing to the redundancy process for an employee(s), ensure that there are no other steps that can be taken to avoid it. Often the seasonality of farming work means that several alternative options have to be quickly ruled out, but it is important that you consider this question as part of the redundancy process.
Would it be possible:
- To change or reduce working hours to fit better with new routines or enterprises while retaining all workers. This change would need to be agreed with the employee and written into their contract. There is no obligation for the employee to agree.
- To move employees into other roles – for some agricultural enterprises, there will be diversified or related enterprises linked to the farm. Is there the potential that the employee(s) could be transferred to that area of work?
- To limit or stop overtime – would limiting or stopping overtime allow for all employees to be retained?
Step 2 - Tell employees
Once the likelihood of redundancies becomes a strong possibility, you should inform all employees. This meeting should involve all employees and not just those that are facing redundancy. The content that should be covered at this meeting is:
- Why redundancy may be necessary.
- How many redundancies are likely.
- What will happen next and how you will keep everyone informed.
For employees that are at risk of redundancy, you should give them a letter at this meeting that confirms:
- That they are at risk of redundancy.
- Whether they have other options, such as voluntary redundancy.
- How they will be consulted on this redundancy (see Step 4 and 6 for more info)
Step 3 - Determine a fair selection criteria
To ensure that the process is fair, and no employee can make claims of unfair dismissal, it is important that there is a clear criteria established to score employees. This would be preferred to an automatic last in, first out policy as a younger employee could make claims of age-related discrimination.
The selection criteria could include factors such as qualifications, specialist skills, experience, performance and attendance or timeliness records. You should have an outline of the criteria you propose before you go to consultation so that it can be agreed on with employees during the consultation.
Step 4 - Consult with employees
It is vital that you consult with employees and ensure they are always informed while listening to their concerns and ideas. It is important that as an employer you are engaging with staff and taking on board what they are saying. It would be worthwhile to take notes or minutes at this meeting as a record of what was discussed.
The consultation should include:
- The reasons that you are having to consider redundancy.
- A list of all the options you have considered to try and avoid reaching this point.
- An indication of the number of redundancies you are considering.
- Listen to any ideas from employees of how to avoid redundancies – you don’t need to agree to them, but it is important that you listen to them.
- Explain the proposed selection criteria.
- Consider asking for volunteers for redundancy.
- Information on the timeframes for redundancies.
- Detail on whether redundancy pay and notice periods will be statutory or whether these will be based on content within contracts.
Step 5 -Carry out the scoring process
Using the fair selection criteria identified, each employee selected for potential redundancy should now be scored. Ideally, two people would conduct the scoring to ensure it is fair. Scores for each criteria can be different, depending on the level of importance to your business. For example, if you were looking at skills and competence, this may be scored out of 15 as shown below but qualifications could be scored out of 5 if it is of less importance to your business.
Step 6 - Hold individual meetings with those who could be made redundant
You should meet with each employee facing redundancy individually at least once. There is a template letter available to invite an employee to a redundancy consultation.
Whilst it’s not a legal requirement, it can be good practice to allow the staff member to bring somebody else with them to the meeting for support.
This meeting should detail their provisional selection for redundancy and give the employee a chance to challenge any criteria or reasoning for selection. You are allowed to change scores following these discussions if you feel it is valid, but you should always take detailed notes of what was covered at the meeting.
Where suitable alternative employment exists, you are legally obliged to offer it during these meetings.
Step 7 - Select the employees to be made redundant
Once all discussions have been concluded and scores finalised, you can now identify the employee(s) with the lowest scores that are to be made redundant.
In situations where employees’ scores change following discussions, resulting in a change to the pool of people selected for redundancy, you must repeat the applicable steps with any new employees brought into selection to ensure fairness.
Step 8 - Work out redundancy pay
Now the employee(s) are selected, you should calculate the redundancy pay due. If you are following statutory redundancy pay, this will be based on their age and length of service. However, it is imperative that you ensure there are no details in their contract that state they will be paid more than statutory requirements.
Statutory redundancy pay applies to this who have worked for an employer for 2 years or more. The following table lays out the basis of calculating a redundancy pay amount:
|Employee Age||No. weeks pay for each full year worked|
|under 22 years old||0.5|
|22-41 years old||1.0|
|over 41 years old||1.5|
An upper limit on weekly pay is set at £643 per week for redundancy pays on or after 6 April 2023. The maximum statutory redundancy pay that can be received is £19,290. Different rates apply prior to 6 April 2023.
Length of service is capped at 20 years with only the last 20 years of employment taken into account. Only complete years are counted and there is no upper age limit for receiving redundancy pay.
For example, a 50-year-old having worked for their employer for 25 years earning £650/week is made redundant on 7 April 2023. The employee would be entitled to 24.5 weeks pay (11 years @ 1.0 plus 9 years @ 1.5). This equates to a redundancy pay of £15,753.50.
An employee is not entitled to redundancy pay if they are offered suitable alternative work by their employer that they refuse without good reason.
Redundancy payment should be made no later than the employee’s last working day. It should be clearly explained whether payment will be separate or included in their last month of wages.
Step 9 - Meet individually with all employees who have been affected to inform them of the outcome
There is a need to meet with both staff who are being made redundant and those who are continuing in their employment. For those who are being made redundant, you would need to:
- Explain that this is the outcome of the process.
- Give the employee a dismissal letter confirming this and the date their employment will end.
- Inform them of what their redundancy pay will be. This calculation should also be detailed on the dismissal letter along with a note of any other payments that are still due to them.
Recommendations and further advice:
Where there is a possibility that a worker who has a house with their job could be made redundant, it would be advised to seek legal advice.
Free, impartial, and expert advice on redundancies is available from Partnership Action for Continued Employment. PACE can support both employers and employees on the redundancy journey.
Related FAS Materials
Related External Materials
For a range of letter templates for redundancy meetings and notice of redundancy - check out the ACAS website Redundancy letter templates | Acas
PACE can offer impartial, one-to-one support for free on redundancy. Read all about what they offer Facing redundancy? | My World of Work
Sign up to the FAS newsletter
Receive updates on news, events and publications from Scotland’s Farm Advisory Service