Redundancy: when there’s no easy option …
29 May 2010
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In the face of recession hard-pressed businesses are being forced to make the toughest decision of all – to shed staff. Are there viable alternatives for employers?

Redundancies are very often ill thought-out and rushed through, typically by employers who are under pressure to deliver cost savings within a rigid timeframe, but who have little knowledge of current employment law. They need to step back from knee-jerk reactions, increase planning and take proper advice. It's costly to make redundancies, but it's more costly to end up in a tribunal. Here, Jane Caven summarises the key points for employers:

  • Write a plan of action, setting out which roles you are considering may be redundant and why. The plan needs to include target dates for each of the key steps.
  • Give warning to employees that you are considering redundancies and why.
  • Check if you have a statutory duty under Section 188 of TULR (C) A 1992 to consult appropriate employee representatives. If you do, you must allow a minimum of 30 days consultation. Even if there is no statutory duty, you must undertake individual consultation. The aim of consultation is to reach agreement on ways of avoiding redundancies altogether or if this is not possible, to mitigate the impact of redundancy on individual employees.
  • Consider alternatives to redundancies such as shorter working hours, reduced overtime, reduced use of sub-contractors, work-sharing, voluntary redundancies (including early retirement), transfers, re-training and wage reductions.
  • If redundancies are unavoidable, draw up objective criteria for the job roles selected.
  • Consult with individuals, even if you have had collective consultation earlier in the process and invite them to offer counter-proposals.
  • If counter proposals are not sufficient to avoid redundancies, write to the employees inviting them to a meeting to discuss the potential redundancy. They are entitled to have a representative, official or otherwise, attend the meeting with them. Consider the representations that are made to you.
  • If after individual consultations redundancy is the only final option, write to your employees and set out their entitlements, including redundancy payment, pay in lieu and holiday pay. The employee may also have a right to appeal, which must be pointed out.
  • Remember that investigations into alternatives to the redundancy must continue right up until the time the employment is terminated.
  • Consider if the employee should work his or her notice period or not. Consider both the individual affected and the impact on the whole team.
  • If 20 or more employees are being made redundant, give formal notification to the Department for Business, Enterprise and Regulatory Reform using Form HR1, a copy also goes to the employee representatives.
Employers not only need to tread carefully around, but they also need to be mindful of employment law when they are considering alternatives to redundancy. For example, firms' ability to implement short-term working generally needs to be written into employment contracts or, if redundancy appears to be the only viable alternative, they must negotiate with the employees concerned. Similarly, complex regulations surround the issue of laying off staff and, with the broad exception of the construction industry, here too the ability to implement lay-offs generally needs to be written into contracts of employment. Changes to contracts of employment bring further legal hazards.

If you need to make employees redundant, or are considering alternative measures, it is important to follow the correct procedures. Advice is available to Forum of Private Business members from our helpline on 0845 130 1722 or from our Employment Guide. Visit: www.fpb.org/employmentguide

Alternatively, for more information visit www.sagegreen.com or call 01606 333677.

This article first appeared in our quarterly member publication Business Insight. Get your copy by email, plus weekly email newsletters and representation to government when you sign up for FREE introductory membership.


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