Redundancy can be one of the most stressful workplace situations for everyone involved. For employees, it presents a world of uncertainty about their future and next career move. For the employer, it often feels like a failure, means following a strict legal processes, while doing their best to be transparent and supportive to affected employees, and mindful of overall employee morale. It’s one heck of a minefield! And oddly, it’s one that many employers don’t even think about until they have to go through it, which means they have no plans or processes in place. At vivoHR we’ve worked with our fair share of these business owners, which is why we want to share with you a few reasons why having a clear redundancy process is so important.
A Crash Course In Redundancy
Establish fair reasons: Redundancy can only be considered as an option when you need to reduce the size of your workforce or a role becomes obsolete. But you have to prove that you have fair reasons for choosing redundancy over any alternatives, and you cannot use redundancy as an excuse to ‘get rid’ of badly performing or behaving employees. Fair reasons include the business is closing or intending to close, it is relocating, ownership is being transferred to another organisation, or the work done by the affected employees is being absorbed by others or that it is no longer needed.
Consider alternatives: Employers are required to consider alternatives to redundancy before going ahead. This means looking at ways to mitigate the threat of redundancy. This could include exploring temporary layoffs, reducing working hours or pay, retraining employees, introducing job shares or reducing other financial payments.
Offer voluntary redundancy: Another alternative to compulsory redundancy is offering voluntary redundancy. If your circumstances allow, you essentially offer employees fair financial compensation to leave the business. This is usually a more expensive route to go down, but it can avoid a lot of issues further down the line.
Redundancy selection: If the position you’re making redundant is carried out by one individual, then you still have to ensure you have made a fair and reasonable decision. If more than one person is at risk, then you’ll need to identify the pool of employees who carry out the role not only by job title but also by role responsibilities that may include roles with different job titles. You then assess them against set criteria to determine who will be at risk of redundancy. It’s not a fun process, but it has to be done by the book, and this is usually where the external help can really come in handy.
Redundancy consultation: Employees have the legal right to be informed if their position is being considered for redundancy, what that means and what redundancy payment they would be entitled to should the outcome of the consultation be that their role is terminated. The length of the consultation will differ on the circumstances but will need to be long enough for it to be considered a meaningful’ consultation has taken place. During these meetings you will need to discuss the possibility of redundancy and explore alternative solutions. Again, this is easier said than done, and you may want to bring in an impartial expert to support you through these conversations.
Suitable alternative employment: As part of your obligation to avoid redundancy if possible, you should discuss any suitable alternative positions with employees who are at risk of being made redundant and would be eligible for redundancy pay.
Dismissal by redundancy & notice periods: If you do make employees redundant, you have to give them formal notice, including a meeting to conclude the redundancy consultation where you explain and confirm the decision made. In this meeting you will let them know what their end date is, and again the details of any redundancy package they will receive. There is a statutory minimum notice period as there is for any dismissal, but it will vary depending on how long the employee has been with you and whether their contract offers more than that minimum.
Redundancy pay: Any employee who’s worked for you for over 2 years is entitled to statutory redundancy pay as a minimum. In certain cases you may need or want to pay enhanced redundancy pay, which is why you should talk to an expert to help you work out the details.
Even that short version is a lot to take in! Which is why so many companies choose to work with an HR expert like vivoHR, to help manage the redundancy process for them.
What Can Happen If You Get It Wrong
The laws on redundancy in this country are complex, and very demanding of the employer. Which is one of the main reasons it’s a last resort for many businesses. When making a member of staff redundant, employers have to follow a fair and legal process that meets the employee’s rights, while protecting the organisation from risk – like tribunal claims. This isn’t something you have to prove just once either. All throughout the redundancy process you have to show compliance with the law, and that you have exhausted all other options before terminating an employee’s contract through redundancy.
There are a few different risks associated with getting something wrong in the process, which can include:
Open yourself up to tribunal: If you don’t follow the law at any point, then the employee might be able to bring a claim against you for unfair dismissal. Which really isn’t something you want on your plate! On top of that, if the tribunal finds in favour of the employee, then they will likely be awarded some kind of compensation, or could even be reinstated into their role, both of which can cause all sorts of issues for your business.
Low workforce morale: Overall workplace morale tends to take a hit if redundancy is on the cards, or carried out. The ‘surviving’ employees in the team and even those not directly affected by the process will be concerned about what’s going on, and the potential for more rounds of redundancy in the future.
Reputational damage: Redundancy is never really seen as a positive thing in the market, and employers need to work hard to make sure they handle the process properly, avoid legal claims and focus on more positive activities to prevent too much reputational damage.
Complaints: Any employee affected by the redundancy process has a right to appeal a termination of employment decision or could bring a grievance or tribunal claim, which will take up time and resources for you to manage properly.
Redundancy Best Practices
Your best bet as an employer is to adopt a proactive approach to workforce management, so that you can avoid redundancies where possible, and be transparent with your employees where it isn’t. While the way you go about this will be different depending on your company and your circumstances, there are a few best practices you can follow:
- Use workforce strategies that bring together planning, recruitment and resourcing to meet and adapt to the changes in your business needs, so you don’t have to resort to redundancies.
- Create a formal business case with evidence on why redundancy is necessary, and why alternatives won’t work.
- Train your HR department and managers to manage a legally compliant redundancy process.
- Make sure that you are openly communicating with your employees and stakeholders throughout the redundancy process. Those directly affected have to be kept informed at every stage, but you should also be communicating with employees not affected so that you can prevent misinformation and a dip in morale.
At vivoHR we work closely with businesses considering redundancy to protect their interests, ensure everything is done by the book, and that individual employees are treated fairly, with dignity and supported in moving forward. If you’re in the difficult position of considering redundancy and aren’t sure what to do next, we are here to help. All you have to do is get in touch with the team today and book your free, confidential consultation.