Support managing redundancies

No employer wants to find itself having to make employees redundant but, sometimes you’re faced with no other choice.

But it isn’t always doom and gloom – there can also be positive changes in a business which might result in restructure.

Either way, it’s important for employers to plan properly, and understand what’s involved, before launching a redundancy process.

Reasons for redundancy

Whilst there are lots of reasons why you might be thinking about a change in your business, and you aren’t restricted in what those reasons can be, there are three situations that meet the legal definition of redundancy:

• Your business is permanently closing

• One of your workplaces is closing

•  You no longer need employees to do work of a particular kind, or you need fewer people doing that particular kind of work

It’s always worth going back to these 3 basic scenarios to determine whether the changes you’re thinking about making fall within the definition of a redundancy situation.

Compulsory Vs voluntary redundancy

In some situations an employer might want to give the workforce the option to volunteer for redundancy – this can have the benefit of avoiding compulsory redundancies, weeding out those who may not be fully committed to the business, and generally make the process a lot smoother.

On the other hand, its important to recognise that volunteers for redundancy are still dismissed by the employer – this means there should still be a fair process, and those with at least 2 years’ service are still entitled to a statutory redundancy payment.

You may also end up getting applications from individuals you definitely didn’t envisage losing, which can create an awkward working relationship moving forward.

In many cases, employers will prefer to keep control of the whole situation by focusing on compulsory redundancies only, or at least keeping voluntary applications to a minimum.

Collective consultation

Managing a redundancy programme can be complex, and you should seek legal advice early on in your planning to help minimise claims against your business. That will especially be the case if you’re planning on dismissing:

• 20 or more employees,

• based at the same establishment,

• in a 90 day period.

Collective consultation obligations are triggered when you combine those 3 elements, and there are specific timings and requirements around consultation involved, including consulting with employee representatives, providing specific information in writing and making a report to the secretary of state.

Failure to follow collective consultation obligations can result in awards of up to 90 days gross pay for each affected employee, and the failure to report to the secretary of state is a criminal offence which can result in a fine on summary conviction for the company and/or an officer of the company.

The definition of redundancy for the purposes of triggering collective consultation obligations is even wider than in individual redundancy cases, so this is a complex area where you should always seek specialist advice.

Individual consultation

Regardless of the numbers involved, you will always need to consult with potentially redundant employees on an individual basis in order to minimise the risk of unfair dismissal claims.

There are no set time periods involved with fewer than 20 proposed dismissals and whilst there is no statutory process, there are well established legal principles as to what will constitute a fair process.

The main features of a fair process are:

• Meaningful consultation with at risk employees

• Considering alternatives to redundancy

• Where necessary, setting up a selection pool, developing objective criteria and selecting employees on a fair basis

The pitfalls

Given that many redundancy situations are prompted by challenging business circumstances, it can be tempting to get the process over and done with as quickly as possible. However, that approach can be a false economy, and it really does pay to take the time to plan diligently and execute a redundancy process with care.

Some common pitfalls and tricky areas include:

• Failing to establish the business case before starting – this should be clear so that throughout the process you’re able to explain to employees why their roles are at risk

• Forgetting to consult with those on family related or long term sick leave

• Failing to consider pooling together those with different job roles but very similar skills

• Moving an employee’s place of work but treating it as a redundancy (this is a complex area –take advice and check the contract of employment for a mobility clause)

• Numbers nearing 20 – the potential financial exposure connected to a failure to collectively consult is large. It’s important therefore to look back at any dismissals made within the previous 90 days when considering your immediate plans. If in doubt as to whether collective applies, take advice.

Letting valuable members of the workforce go is tough and it can be an emotional experience for both you and your employees. Seeking the right advice early on will relieve some of that pressure, ensure you follow the correct procedure and minimise the risk of claims.