Redundancies – do’s and don’ts
With news this month that the number of people being made redundant in the UK has soared to a record high, amid the second coronavirus wave, there is every indication that the trend resulting from the pandemic will continue for the foreseeable future. A recent survey by ACAS also suggests that an alarming number of businesses, 24% of the 2,097 businesses canvassed, are unaware of the law around consulting staff before making redundancies. We bring you a timely reminder of the essentials when approaching a redundancy exercise
Fair processes and meaningful consultation are essential in minimising a range of risks in redundancy situations – whether additional and unnecessary distress of those affected and possible tribunal claims, damage to the employer’s reputation, or damage to the goodwill and morale of the rest of its workforce.
ACAS, the CBI and the TUC have attempted to address this with a joint statement on best practice for handling redundancy situations in the wake of the COVID-19 pandemic. The statement urges employers to exhaust all possible alternatives before making any redundancies such as part-time working, reducing overtime, alternative roles and retraining.
The joint statement sets out the following guiding principles:
- Do it openly – the sooner people understand the situation, the better for everyone;
- Do it thoroughly – To understand what’s happening, people need information and guidance. Training for staff representatives is suggested;
- Do it genuinely – Consultation means hearing people’s views before making a decision. Be open to alternatives suggested during consultation and always feedback;
- Do it fairly – All aspects of the redundancy procedure should be conducted fairly and without any form of discrimination.
- Do it with dignity – Losing your job has a human as a well as a business cost and the way the employer lets people go says a lot about the organisation’s values.
These guiding principles are certainly sensible, but for anyone unfamiliar to redundancy situations (or a little rusty), they may need further explanation. We set out below some considerations for these guiding principles, along with tips for helping your redundancy process to run smoothly.
Doing it openly and thoroughly
It is fair to say that, where employees feel that they have been kept informed and the employer has been open with them, enabling them to have a say, they are less likely to feel disgruntled – beyond, of course, the unavoidable distress of losing their job. On the whole, the earlier you start talking to staff the better, even if there is no requirement to collectively consult. Fully explaining the business case for redundancies will also help to obtain employee buy in and enable them to help suggest possible alternatives.
If you are planning to consult with employee representatives (a requirement for businesses making 20 or more redundancies, who need to collectively consult and who do not have trade union recognition) then it is sensible to provide them with training and ensure that they understand their role and what they need to do. Make sure sufficient planning is undertaken prior to any consultation meetings, and everything has been fully thought through. Preparing written announcements and FAQs may help.
Doing it genuinely
Ensure that any plans for redundancies are referred to as “proposals” throughout, and no final decisions are made before consultation has been undertaken. Give employees an opportunity to come up with ideas for alternatives to redundancy and give those suggestions genuine consideration. If you don’t agree with the ideas, explain why. The more involved the employees are in the process, and the more they feel they have been listened to, the less likely they are to dispute the need for redundancies.
Doing it fairly
As well as the points outlined above, a redundancy process will usually need the following to be deemed “fair” and lawful:
- Collective consultation –if you are proposing to make 20 or more redundancies in a 90 day period, you will be obliged to collectively consult as soon as the proposals are formulated, and at least 30 days (45 days if you are proposing 100 or more redundancies) before any dismissals take effect. If there is no trade union recognition, businesses with more than 20 staff will be obliged to arrange elections for employee representatives. Think carefully about how many representatives you want, too many people around a table can make discussions unwieldy, but too few and the workforce may feel they are not properly represented.
- Fair selection – using pools – when determining who to make redundant, it is crucial that selection is done in an objective way; the more evidence you have of the reasons why a particular individual was selected, the better. Pools for selection need to be considered carefully, ensuring that employees whose jobs are interchangeable are all included in the same selection pool, even if their job titles are different.
- Fair selection criteria – In order to select employees from a pool, we usually suggest using a selection matrix with weighted scores given to different criteria. The selection criteria should be objective and avoid anything which could be discriminatory, for example a heavy reliance on sickness absence could amount to disability discrimination in some cases, or a length of service criterion could be discriminatory on the grounds of age. Use appraisals and other evidence to show why employees have received the specific scores, and ideally get two or more managers to score each employee in the pool independently.
- Enabling the employee to prepare – employees should be given sufficient notice of redundancy consultation meetings (at least two to three days) and given any relevant information prior to the meeting. For example, you would ideally write to them to invite them to the meeting, and set out the business case for redundancy. Explain the pool used for selection, the selection criteria and give them a copy of their scores. You are not required to tell them everyone else’s scores, but you should let them know what the break point was (i.e. the lowest score which did not result in the employee being put at risk of redundancy).
- Individual consultation – we always recommend at least two meetings with individuals at risk, or potentially more than two if consultation is not exhausted after those meetings. As well as enabling the employees to discuss alternatives to redundancy, they must be allowed to make representations about their selection for redundancy, particularly any scores given to them by managers. Keep detailed notes of consultation meetings;
- Alternative jobs – Employees should be notified of all vacancies in the organisation, and either given, or encouraged to apply for, anything suitable;
- Right of appeal – once the redundancy has been confirmed, best practice is to offer a right of appeal. This gives the employee one further chance to change the employer’s mind, and allows an opportunity to remedy any defects in the original process.
Doing it with dignity
Managers can sometimes get so caught up in the procedural aspects of redundancy, and the need to tick all the boxes, that there can be a danger of forgetting that they are dealing with people. On the other hand, managers themselves are likely to find the whole process of letting staff go because of business difficulties very stressful themselves. Be sympathetic, supportive and treat all of the employees, including those responsible for carrying out the process, with care. To some extent, this outweighs everything else – human nature is such that an employee who feels treated well is much less likely to bring an employment claim, even if the process followed was technically flawed.
Getting it right is important and it is well worth getting advice and support before embarking on the process, please do get in touch – we can advise on all aspects of redundancy and may be able to suggest some new approaches which minimise risk and stress for all concerned.