- 23 January 2024
It is an unfortunate reality of the current financial landscape that many employers are having to make the difficult decision to restructure and make redundancies. For many companies, particularly small companies and start-ups, this may be the first time they have had to make redundancies and the process and decisions can be daunting. Even for established companies, it is always worth a refresher on the law before starting out.
Redundancy law in the UK can be tricky to get right, and when it goes wrong, the consequences for the company and the individuals involved can be upsetting and expensive.
With that in mind, here are our top tips for employers who are considering making redundancies.
1. Consider how many redundancies you need
This may seem like an obvious step, but it is crucially important. In UK law there are very different and more onerous obligations for employers who are making collective redundancies. This is redundancies of 20 or more employees.. If you are unsure who to include in the numbers, its best to get legal advice on this, as failure to collectively consult when you should have done will give employees an unfair dismissal claim.
You should also consider if there are any union agreements or workplace policies in place that require collective consultation for less that 20 employees.
When working out how many redundancies you need, this should be based on a purely business decision, financial or structural, not on specific employees you think should be made redundant. It is an important part of running a fair process that the company applies a fair selection criteria and meaningfully consults with employees. This can easily be picked apart if an employee can show that you had already made your mind up about who specifically is being made redundant.
2. Consider alternatives now
We recommend that you look at alternatives early in the process, and continue to consider this throughout. Part of running a fair process includes the obligation to consider ways to reduce the number of redundancies necessary. There are lots of ways that an employer can save costs and save jobs, but here are a few that we recommend considering:
- Offer voluntary redundancy – this can be a company wide offer, but remember to include wording that gives you the ability to reject applications!
- Job sharing – this is becoming more popular with the increase of people working part time
- Hiring freeze – it may be difficult to defend a genuine redundancy situation if you are still actively hiring new staff
- Let go of temporary staff – be sure to think about other risks when doing this, and consider employment status
3. Check your policies are up to date and accessible
It is always sensible to have a redundancy policy in place before embarking on this process. This is useful for employees to refer to so they know what to expect, but also for those involved in the process to reference to make sure they are following the rules. If you already have a policy in place, we advise checking this over again to make sure the law is up to date, and it complies with your current company standards and objectives.
When working out how many redundancies you need, this should be based on a purely business decision, financial or structural, not on specific employees you think should be made redundant
4. Make sure the right person is leading the process
It is really important that whoever runs the redundancy process is well versed in the process . Make sure that they know the law, know the policy, and are confident to ask questions if they are unsure.
Its also a good idea to have someone in place who can handle what will inevitably be some difficult consultation meetings. We always recommend having more than one person present in these meetings, and making sure that a note is taken so that you can refer back when there is debate or challenge.
If you have time before starting the process, it’s a really good idea to arrange some refresher training for everyone who will be involved in delivering the process.
5. Be open and transparent
To run a fair process, employers should be transparent and open with their employees from the very start. If you attempt to hide parts of the proceedings, or launch redundancies on at risk employees as a surprise, you are much more likely to find yourselves at the end of an unfair dismissal claim.
Acas recommends that before starting the process, employers prepare a redundancy plan which clearly sets out the steps the company has and is going to take. This plan should then be shared with all staff, so no one is taken by surprise.
6. Take legal advice
Our final bonus tip, is to take legal advice, and take it early. It can be so difficult to run a redundancy process, particularly from within an organisation. Guidance on managing the often very different expectations and timeframes of the Board and/or shareholders and the employees, whilst maintaining integrity of process and compliance can be a huge challenge for anyone tasked with the process. If you find yourself facing this situation, our employment lawyers are on hand to provide you with clear guidance. It is always better to get ahead of any potential issues and take advice early, than have to seek advice when you are facing a legal claim.
For more information, please contact a member of the team here.
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.
About this article
SubjectNavigating Redundancy: Top Tips for Employers Considering Redundancies
Published23 January 2024
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