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How Long After Redundancy Can Your Rehire In The UK?

rehire after redundancy

Businesses must tread carefully when rehiring after making redundancies otherwise they may face unfair dismissal claims from disgruntled employees that were let go under redundancy terms.

There is no set time frame for rehiring but there are considerations to make. Employers can rehire when:

  • The original redundancy was due to a genuine and demonstrable change in the company’s operational needs – not just to get ride of employees.
  • A reasonable time has passed since the redundancy. The business must be able to demonstrate a change in circumstances that requires previously made redundancy roles to be filled again.
  • The new hire is for a different role with new duties and requirements from the role that was made redundant.

Making redundancies is always a difficult time for businesses. From the managers tasked with making the decisions and delivering the bad news, to the employees facing an unexpected end to their job, it’s a challenging process to navigate.

Read on to understand the process surrounding rehiring after redundancies have been made.

How long do you have to wait before hiring again?

While the law doesn’t give an exact time, it’s best to take some time and reflect on the decisions made and let the business adapt to its new structure before making any new or rash hiring decisions.

If you don’t wait and it can appear to those affected that you let them go, just to replace them with someone else. That would be illegal and could lead to wrongful or unfair dismissal claims being brought against you under UK employment law.

Employment tribunal claims can be made within three months of the termination of a contract, so that is the minimum amount of time a business should wait before rehiring.

In the case of a genuine redundancy situation, it’s extremely unlikely that circumstances would have changed enough within this time to consider rehiring anyway.

After making redundancies, the first priority should be to think about what went wrong and if there are any changes you could make in the future so that way, layoffs don’t need to happen again. This includes reviewing your business strategy and direction, recruitment process, training and development opportunities, team dynamics, and staff morale.

Tips for rehiring after redundancy

Rehiring after redundancy is an area of employment law that needs to be taken seriously. Here are some simple tips to ensure that you don’t fall foul of unfair dismissal claims.

1. Ensure the role has changed significantly

If you want to rehire for the same role you made redundant, make sure that the job has changed significantly from its former incarnation. This could be covered by expanding the role to take on new tasks that were previously outside of the scope of the role and the skillset of the person within it, or merging two similar roles together.

2. Advertise the job properly

The job must be advertised properly to ensure there is no risk of being viewed as underhand by covertly trying to fill the position that had been made redundant. Using popular job sites, your own website and local newspaper job pages can all aid this process and you can even include information that makes it clear that the role is a new role to due redundancy if needed.

3. Focus on the skills needed

The key to filling any job role is to clearly identify the skills and experience needed to deliver the job well. Focus on these points rather than the skills or experience that the person who previously held the role may have had.

4. Consider the impact on existing staff

Staff morale can really take a hit during and after redundancies. Be careful to consider the feelings of your current staff if rehiring for a role or a similar role that was previously held by their colleagues. They may feel this is an unfair situation if they were friends with the person that used to work there so you must ensure that you are clear on the reasons for rehiring and the scope of the role that is being filled to ensure that the process is fair throughout.

5. Ensure fair and transparent processes

Make sure that all recruitment and selection processes are fair and transparent. Ensure that all candidates have an equal opportunity to apply for the role, regardless of any prior connection to the company.

6. Provide support for new employees

Finally, make sure you provide adequate support for new employees who may be entering a completely different workforce. Explain the company’s policies and procedures, provide an induction process, and make sure they feel welcome in their new role.

Can you rehire an employee that you previously made redundant?

It is possible to rehire an employee that was previously made redundant as long as the processes followed are fair and transparent at all times.

By rehiring an employee that was previously made redundant, it can look like the redundancy either wasn’t genuine in the first place, or wasn’t fair, particularly if others who were made redundant at the same time are not given an opportunity to reapply for new roles at the company.

Regardless of wether someone has worked for the business before, employers must follow the same recruitment process for all applicants. This includes advertising the role with equal opportunities for everyone to apply and interviewing each candidate to assess their skills and competency in line with the role being advertised.

The role needs to be significantly different from the previous role and therefore this helps to ensure that previous workers are not unfairly dismissed during the recruitment process due to their previous experience.

The decision to rehire a redundant employee should not be taken lightly, and it is important to ensure that you are following the relevant regulations and procedures in order to protect your business from legal action.

Pros and cons of rehiring ex-employees

There will always be advantages and disadvantages of hiring ex-employees, especially those that have been made redundant. Here is a snapshot of things to consider:

Advantages

  • Increased loyalty – Previous employees that have taken the time to re-apply for a role at the same company are demonstrating that they really want to work for the organisation. This can lead to increased levels of commitment and loyalty and therefore less chance of them leaving in the future.
  • Cost savings – Whilst a role should never be filled on the basis of costs to do so, bringing an old employee back can save time and money on training due to their existing knowledge of the company and its culture. Depending on the time between their original role and new role, this may be diminished if things have moved on significantly.
  • Retention of skills – Rehiring ex-employees can help retain valuable skills and knowledge within the organisation, which can be beneficial for business efficiency and development.
  • Familiarity – Rehiring an ex-employee can be beneficial, as they will already have a thorough understanding of the company’s operations, processes and procedures. The company also already knows the strengths and weaknesses of the employee, so you know what type of person you’re hiring already.

Disadvantages

  • Reputation –In some situations, it can be damaging to rehire employees that have previously been let go. It can look like the business strategy was ill thought out which can lead to a lack of confidence in its management going forward.
  • Legal issues – When you rehire an employee that you previously made redundant, this could lead to other redundant employees arguing that their redundancy was not genuine and claiming unfair dismissal.
  • Reduced loyalty – This point was included in the advantages too, but it can also be a disadvantage depending on the person involved. If an individual holds a grudge against the company for their redundancy, they may not work as productively for them when rehired.

There will always be pros and cons to every business decision and recruitment after redundancy is no different. If an ex-employee applies for a new role at your business, they should be treated equally and fairly in line with everyone else applying.

Justifications for redundancy

Whilst redundancy is a topic full of negative connotations, it is a legitimate process that businesses can use to secure their future and there are several valid reasons that redundancies can be used to streamline operations and help financial difficulties.

Here are some of the most common reasons for redundancies in a company.

1. Financial difficulties

Finances are often the biggest reason for a business needing to let employees go. If the business isn’t turning over enough money or making enough profit, it will be unable to pay its debts, liabilities and running costs – including wages for its staff.

In this situation, it may be necessary for the number of staff employed to be reduced or for surplus roles to be cut from the organisation to save enough money that the business can continue to operate.

2. Changes in the market

When the market that the business operates in changes, it can have huge knock-on changes to the business itself. If the products and services produced are no longer in demand, then the business will need to adapt quickly to ensure that it remains profitable.

This could again lead to staff being let go as a way to keep finances stable during difficult times. An example of this includes the Covid-19 pandemic of 2020 where lots of businesses found their client base wiped out in a very short period of time.

3. Changes in technology

When technology enhancements develop processes and efficiencies that can get work done quicker than a human, it sometimes makes business sense to transition employee roles to ones that can be managed by technology/software/machinery. The result here is that the original role becomes redundant as it’s no longer needed.

  1. Poor performance

If a business is performing poorly, it may need to reduce the workforce to save money. Again, this will be a difficult decision to make, especially if people who aren’t directly involved in the business decision making that have led to the current position are let go.

5. Restructuring

Redundancies are common at the time of business restructures like acquisitions and mergers. In these cases, there may be several people doing the same job but only one version of the role is required. This would mean that a fair way of deciding who stays and goes is needed. Discussions here can often start with a request for ‘voluntary redundancy;

Legal risks when making redundancies

The firing and hiring of employees is an important area of employment law that employers must navigate fairly. If they fail to act in a fair and transparent way, they could face legal repercussions including employment tribunals.

Keep the following risks in mind when making redundancies to ensure that actions taken are guided by employment law as well as strategic business decisions.

Genuine Redundancy

Redundancy must be genuine and due to valid business reasons. If roles are refilled shortly after, employees may argue that the process was not genuine and result in claims of unfair dismissal. This is especially true if roles are not significantly different to the ones that were made redundant originally.

Unfair Selection

When selecting employees for redundancy, you must be careful to do this in a fair and transparent way. You must not for example discriminate based on age, race, gender or any other protected characteristic. Failure to do this properly can lead to discrimination claims when making redundancies.

Failure To Consult

If you fail to consult staff before making redundancies, you are at risk of breaching the Employment Rights Act 1996 as this can be seen as an unreasonable action. Businesses should take specialist advice from HR consultants before entering the redundancy process to ensure all steps are followed.

Do HMRC investigate redundancies?

HMRC can investigate redundancies, and are more likely to do some when employees are rehired shortly after redundancies were made. This action is taken to help prevent businesses from tax avoidance or trying to reduce their tax liabilities unfairly.

In order to pass scrutiny from HMRC surrounding redundancies and rehiring, businesses must be able to demonstrate their compliance with fair procedures and employment law. If found to have required employees without meeting these requirements, they will remain accountable for National Insurance Contributions.

Final thoughts

If you are a business owner facing financial difficulties or going through a restructure, acquisition or merger, the topic of redundancy may need to be assessed. It’s a stressful time for all involved, especially employees who are suddenly let go.

If you decide to rehire in the future, you must be careful that this is some in a fair manner that will not result in unfair dismissal claims being made against you from the people that you have let go.

Following the correct notice/consultation period, using fair and objective selection criteria when selecting employees for redundancy, communicating the processes clearly with employees and having a valid business reason for making redundancies will all ensure that you can successfully navigate the legal compliance needed when rehiring after redundancy.

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