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A Brief Guide on Dealing with Redundancies

Since March 2020 when our world at work completely changed courtesy of Covid-19, the topic that seems to be top of the list of many businesses’ agenda at the moment is, sadly, Redundancy.

As we approach the end of the timescale for the Government’s Coronavirus Job Retention Scheme (ending October 2020), many organisations are reviewing the needs of their business, the number of staff, and the location in which they will work into the future.   

So, what does Redundancy really mean?

It is one of the potentially fair reasons to dismiss an employee but in order to ensure that it is ‘fair’, any business considering redundancy should ensure they understand the process that they must go through so that the outcome is legal.  Businesses suffer significant reputational damage if they handle redundancy situations badly, let alone the exposure they place themselves in should an Employment Tribunal make a finding of ‘unfair dismissal’ because of a failure to follow a fair and legal process. 

Although, not covered in this article, it should be noted that with regards to Employment Tribunal ‘findings’, where a redundancy has been deemed as ‘unfair’, there are often other claims to be considered.  It therefore becomes even more important to know what you need to do in any situation that is likely to result in the termination of employment for a member of staff, even though this article is purely focusing on redundancy. 

An employee may be dismissed as redundant when a business closes down, or if the need for employees to carry out work of a particular kind has ceased, diminished, or is expected to cease or diminish.  If a redundancy situation arises, all employers have a number of statutory duties towards employees, including the duty to consult, and to pay a minimum of statutory redundancy pay to those who are eligible for it.  

How to go about dealing with redundancies?

If your business is considering redundancy to future proof your here is a checklist of things to take into account:

  1. Remember, it is the job that is made redundant not an individual.  It is the requirement for the job to be done, in the same place or by the same number of people that is key.   
  2. Construct a ‘business case’ to support your findings that changes need to be made.  This does not have to be complex, but it does have to demonstrate that the change is justifiable.  In some circumstances, this is much easier e.g. our business no longer sells ‘blue widgets’ so the people that make the ‘blue widgets’ are no longer needed.   
  3. In ‘2’ above, consider if it is possible to reorganise the business to allow those that made the ‘blue widgets’ to work in other areas of the business.  Are there alternative options for them?  This will help you to demonstrate that you considered alternatives to try to avoid redundancy.
  4. Consider how many people you may need to make redundant.  If it is under 20 in one establishment the rules are simpler.  If it is over 20, seek advice before doing anything. 
  5. Look at the jobs that are impacted.  If you have more than one person doing the job and you need less people doing that job in the future, you will have what is known as a ‘pool’ so you need a ‘fair’ process to select from the ‘pool’.  You will need a ‘selection criteria’ that is fair and objective.  Your proposed criteria must not focus on anything that could be a ‘protected characteristic’ either directly or indirectly e.g. age, gender/gender reassignment, disability, ethnicity/race, religion or belief, sex or sexual orientation, marriage/civil partnership, pregnancy and maternity.
  6. Make sure you write to those affected informing them that you are considering the need for redundancies and letting them know if and how they might be affected.  You should explain the process that you will use and the timetable that you will be following during the process.
  7. Consider if you are able to ask for volunteers for redundancy.  This is not always possible or realistic.  Seek advice if you think a change could be achieved via a voluntary redundancy programme rather than a compulsory redundancy programme. 
  8. Hold consultation meetings with affected individuals.  Depending on the numbers and the process, assuming less than 20 people are affected, this could be anything from 1 to 3 meetings.  The important thing to remember is that consultation meetings should be ‘meaningful’, not just a ‘tick box’ exercise.  You must listen to suggestions or considerations raised by the individual.  
  9. Take notes at all meetings and provide letters and copies of notes to individuals so that you have documented evidence of the process that you followed.
  10. When the process has been concluded, you can then issue the formal notice of redundancy letter which includes a summary of what you have gone through, details of payments due to the employee and provides them with a right to appeal against your decision.  

What next?

First of all, take your time to consider all options that may be available to you.  If you are unsure of any aspect of the process, seek advice from an HR Professional, or Employment Law Adviser.  Employees with less than two year’s continuous service do not have enough qualifying service to bring a claim for Unfair Dismissal via an Employment Tribunal but they are protected from discrimination.  Always check the contract of employment that you issued to ensure you are not breaching any of the terms contained in it.  It is important that you treat your employees with respect and dignity.  Redundancy is horrible for everyone including those issuing it.   

Useful Links:

Definition of The Employment Rights Act 1996 

The Advisory, Conciliation and Arbitration Service (ACAS) gives employees and employers free, impartial advice on workplace rights, rules and best practice.

Calculate your Redundancy Pay

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