How to manage employee redundancies?

Looking at other alternatives

Redundancy should be an employer’s last option when restructuring their business. There are necessary steps that should be taken to ensure that redundancy is the best move forward; alternative options may include changing working hours and moving employees to other roles with the same transferable skills. Employers may also choose to restrict or reduce overtime, as well as consider flexible working, career breaks or offering voluntary redundancy.

Following the right redundancy protocol

If the decision is taken that redundancy is the best way forward, employers should confirm if they have a policy they have to follow or a collective agreement with a trade union which outlines what an employer must do in this situation.

Who should be consulted

Employers must follow a fair redundancy process, and so should be aware of their obligations to consult staff, either individually or collectively.

The statutory collective consultation obligations are triggered where an employer is proposing to dismiss more than 20 employees within a 90 day period.

The period of consultation should last at least 30 days if the number is above 20 and below 100, or at least 45 days if the number exceeds 100 employees at risk of redundancy.

The Secretary of State should also be informed through a HR1 form, and failure to do so is a criminal offence. The HR1 form should be completed in good time – within the consultation period and ahead of the first dismissal taking effect.

Who should act as the employee representatives

It is important for employers to consider if there is a recognised trade union that can act as representatives for the employee cohort.

If this is not the case, then employee representatives can be consulted on the proposed redundancy plans. This should be a directly elected standing body of representatives.

Employee representatives can also be elected, should there be none for the employer to consult, and there are specific statutory rules on how to carry this out.

The process of selecting employees for redundancy

At this stage in the redundancy process, employers should set up selection pools to ensure that employees are selected for redundancy in a fair way. This should be done if the numbers in a particular team are to be reduced. If there are multiple types of roles undergoing this process, the employer should consider setting up multiple selection pools.

Employees should be scored against a certain selection criteria, the ones with the lowest scores will be selected for redundancy. The criteria should be as ‘objective’ and ‘measurable’ as possible, it should be a presentation of the company’s needs, and measurable with evidence.

The criteria should be included as part of the discussions during the consultation period. If this is not done, it may expose the employer to discrimination claims.

Individual consultation

All employers are required to carry out individual consultation with at risk employees. Even if collective consultation is a necessary part of the process of assessing possible redundancies, employers should also carry out individual consultations with employees placed at risk.

Employers should take care for this to be done in good time before the final decision is made, and that the employees are made aware of all the relevant information. Employers should consider allowing employees to be accompanied to consultation meetings, so that support can be provided, and managers who hold such meetings should have the relevant training to do so.

Discussing redundancy pay and giving notice

Following the periods of consultation and the selection of employees, employers should calculate the amount of redundancy pay that should be given in line with guidelines.

Notice should be given to the employees that have been selected for redundancy. The details should be discussed in a private meetings, and employers should allow for them to be accompanied. Further to this, the details of the redundancy should be put in writing. These details should include elements such as how the employee scored on the criteria, how much redundancy pay they will get and the notice period with the employee’s leaving date.

If the employer has chosen to offer voluntary redundancy, it may be appropriate to offer more compensation within these circumstances.

Employers should be prepared to offer the chance to appeal to the affected employees, this should be set out in the redundancy plan, as well as any redundancy policy the organisation may have.

This is a useful process for employers as well as employees as it gives the chance to understand if the process may have been unfair and offers an opportunity to correct this. However, if the appeal is successful, an employer may have to deal with the difficult situation of having to select another employee for redundancy. An employee that may have been selected to stay beforehand; open communication and genuine support will be very valuable for employers in these circumstances.

Offers of alternative employment

To ensure the process is fair, the employer should be aware that they must try to move employees selected for redundancy to another job within the same organisation. If there is a suitable role, and it is not offered, the employee could make a claim for unfair dismissal to an employment tribunal.

Employers should be particularly careful if making an employee who is on maternity or shared parental leave at risk of redundancy. Employees in these circumstances must be preferentially offered any appropriate job vacancies before other at risk colleagues.

So it is important for employers to consider the entire job scope of their organisation and attempt to move employees before making them redundant. It should be the last option considered, and the one most carefully executed to make the process fair and less abrasive on all persons involved.

If you are facing a redundancy situation, either as an employee or employer, please do get in touch with our redundancy solicitors who will be happy to offer advice.