Your guide to dealing with redundancy

14 October 2008

Email article : Print article : More articles like this

As an employer, you may prefer not to contemplate having to make redundancies, but unfortunately they are becoming a harsh reality of running a business in the current economic climate.

Whether or not you are planning to make a redundancy, failure to prepare for the possibility of such a situation can leave you in danger of walking into a minefield of costly and time consuming problems.

Here are our 10 tips to help you prepare yourself for dealing with a redundancy situation:

1. Know how to identify a potential redundancy situation.

Redundancy arises when an employer no longer requires a role to be carried out, where there is a reduction in the number of people required to fill a role or when a business is closing or relocating.

It is important to remember that redundancy is about the needs of your organisation and the change in the need for the role. It is not about the performance of an individual or their failings.

Note: TUPE (transfer of undertakings) is not the same as redundancy.

2. Plan thoroughly and take advice.

Where any potential redundancy situation is identified, plan thoroughly and timetable what actions you need to take. Take advice to minimise the risk of expensive and time consuming claims. Redundancy exercises take many weeks to carry out properly. Do not expect you can immediately dismiss employees.

3. Consult, consult, consult!

The largest part of a redundancy exercise is carrying out consultation. Collective redundancies (where 20 or more employees are proposed to be dismissed within a period of 90 days) require the giving of specific written information and consultation with trade union or employee representatives over prescribed periods before any employee can be given notice. Individual consultations must take place too.

Consultation is a two way process. Representatives and individuals have a right to respond to the redundancy risk, any selection methods and how these are applied, plus alternative ways in which jobs can be preserved. All of this must be discussed before you make a final decision.

4. Follow the statutory procedures.

Statutory procedures apply to dismissals on the grounds of redundancy. They do not technically apply where the collective consultation provisions apply, but in practice employers are advised to follow them to show a degree of individual consultation and dialogue.

5. Consider who you put at risk.

The pool of employees who may be at risk will need to be identified. Whilst it is often considered best practice to consider all those at risk, you may not want to cause a period of uncertainty for those who will stay. This is a fine line and an incorrect pool can ultimately make a subsequent dismissal unfair.

6. Get your selection right.

Where employers need to select from a pool, selection must be by criteria which is objective, capable of measurement and non discriminatory. A 'last in, first out' policy carries an age discrimination risk (which needs to be carefully assessed with a legal advisor) whilst attendance should discount any absences caused by disability or pregnancy.

7. Know how much employees will get.

Identify the cost of contractual notice or payment in lieu of notice and redundancy payments. In collective redundancies, formal notice is usually unable to be given until the prescribed periods have elapsed. Statutory redundancy payments are based on length of service, age and salary. Employees may also be entitled to more if there is a contractual right to an enhanced redundancy payment.

8. Watch your language!

Consistently use the right terminology such as proposed, envisaged and intended to show that nothing is set in stone. All relevant documents are potentially required to be disclosed in any subsequent tribunal claim. Lists of names identifying those to be made redundant, inappropriately worded e-mails or future organisation charts are traps for the impatient and unwary employer.

9. Beware of future recruitment.

If there are vacancies available which can be filled by those at risk of redundancy, then they must be offered to them. Seeing job adverts is an easy way to antagonise those made redundant and any tribunal will carefully scrutinise when such vacancies arose.

10. Look after those that are staying.

The purpose of redundancy is to make an organisation run more efficiently and it is easy to lose sight of the employees who are going to stay and make that a reality. Consider how you will communicate with them, what you will say and how you can make the message for them positive.

About the author

This article was written by Martin Edwards, head of employment law at Mace & Jones, a law firm based in Liverpool, Manchester and Knutsford. Contact: martin.edwards@maceandjones.co.uk

Email:
eNewsletter archive

Your guide to dealing with redundancy

Related articles