Economic dips come and go and in their wake are businesses left struggling financially. A number succumb to their wounds, while others end up as zombies unable to do anything than just about service their debts. Some, however, bounce back because they’ve taken proactive steps to manage their position – part of which means cutting jobs.
It’s something that lawyers are seeing much of right now and is a move that the sector has seen its fair share of – most recently with ATS Euromaster’s closure of 86 sites with the potential loss of 400 jobs. But there have been others: Cooper-Avon in October 2018 (300 jobs), and Schaeffler in November 2024 (4700 jobs).
And it’s just as bad elsewhere. A January 2025 report in the Financial Times noted that “job losses at European car part suppliers more than doubled in 2024 as the slowdown in the continent’s automotive industry hit the fortunes of its manufacturing supply chain”. It added that “there have been more than 58,000 net job losses across the industry in Europe since 2020.”
In the tribunals
No one doubts the need for employers to reshape their workforces which, inevitably, may mean redundancies, but in the UK the process for making them is strictly defined. Employers that ignore the rules tend to find themselves in front of an Employment Tribunal judge.
Such cases are not hard to find. Consider the two claims lost by Southgate (Park Garage) Limited in 2019. In the first, Mr A Evans was awarded £10,577.78. In the other, Mr S Evans was awarded £11,464.20. And in January 2025, in Mr D Rolfe v Car Parts (GB) Ltd, the claimant was awarded £6,253.50.
All of this means that employers need to be careful when making redundancies.
To begin with, Tina Chander, partner and head of employment law at Wright Hassall, says that “employers should consider inviting employees to apply for voluntary redundancy”. This “could avoid the employer commencing a formal redundancy process and making compulsory redundancies”.
However, this option carries the risk of the most experienced employees with the highest redundancy entitlements wanting to apply.
Regardless, employers still need to avoid unnecessary redundancies which Chander says “equates to one of two things – either trying to find suitable alternative employment or looking at filling general vacancies”.
Redundancies require a fair process
But where compulsory redundancies are on the table a fair process must be undertaken with meaningful consultation.
This is important: anyone made redundant may feel they have been treated unfairly as they have lost their job through no fault of their own. Employers cannot prevent claims being made and there is little to lose for an employee to bring one.
As to what a fair process looks like, Chander says that the redundancy process will be determined by whether there is a redundancy policy in place, whether there is a union recognition agreement, how many employees may be made redundant, and how redundant employees are going to be selected.
She explains: “The law imposes minimum consultation periods on employers depending on how many staff are being made redundant. For 20 to 99 redundancies, the consultation must start at least 30 days before any dismissals take effect while for 100 or more redundancies, the consultation must start at least 45 days before any dismissals take effect.”
In terms of a fair selection criteria, the more objective the selection criteria the less likely the process can be successfully challenged. Chander warns “if a tribunal is shown inconsistencies about how staff have been treated and no reasonable explanation is forthcoming, it is entitled to query whether the process is not within a range or reasonable conduct”.
Ultimately, the legal test of whether a dismissal for redundancy is fair is about whether a tribunal would have conducted the process differently – and whether the decision to dismiss was within a range of conduct that a reasonable employer could have adopted.
Getting the process wrong can be expensive. The costs of defending an Employment Tribunal claim can easily run into five figures. On top of that, the maximum compensatory award for unfair dismissal increases from £115,115 to £118,223 from 6 April 2025.
Go to comments