How to tackle the 'R' word fairly and correctly

Connection's Guide to Redundancy

The credit crunch has served as a stark reminder that UK businesses are at the mercy of the economy – and the inevitable result for some will be change. If this is relevant to your business, you may want to consider some immediate actions like overhauling your reward and recognition strategies, reviewing absence and performance processes and investigating causes of possible employee disengagement.

Making employees redundant is always the last resort, and it is well worth considering some of the above options before you reach this conclusion. As businesses across the UK look to balance the books and streamline operations during this difficult period however, it can be a necessary one.

If you get the process right, you can renew confidence in those employees who remain. If you get it wrong, however, you could be faced with worsening employee disengagement, and in addition you may even be facing employment tribunal claims.

You must ensure that you deal with the redundancy process according to the Employment Rights Act of 1996, and ensure that the redundancies arise where the dismissal is due to:

• closure of your business
• closure of the employee’s department or place of work
• the cessation, diminishing or expected diminishing of specific work
• the cessation, diminishing or expected diminishing of the requirement for that employee to carry out work in the place where they are employed.

Failure to follow the correct procedures can result in compensation being paid out at an employment tribunal. According to a recent C.I.P.D. survey, employee awareness of their rights at work has increased by 30% over the last year, and they are more likely than ever to consider pursuing fair treatment outside of the organisation concerned. It is also important to remember that tribunals are more inclined to view companies as guilty until proven innocent, and with employees being offered “no win no fee” legal representation, they have little to lose in bringing a case against you if they feel they have been unfairly selected for redundancy.

You should consider your selection criteria for redundancy very carefully before you initiate any redundancy planning. This will ensure that you select on a fair and equal basis, and reduce the risk of discrimination claims.

The statutory dismissal procedure is as follows:

Step One

Whilst in the planning stages, you have an obligation to consult collectively with the appropriate trade unions, or elected employee consultation forums depending on your business. You will need to prepare a variety of plans, documents and presentations for successful communication at these meetings. Consultation should start at least 30 days before the first dismissal in the case of between 20 and 99 employees being made redundant within a period of 90 days.

If more than 100 employees are being made redundant in that period, then the consultation period should start at least 90 days before the first dismissal.

Note that the Consultation is exactly that – and the actual redundancy situation should not be considered a foregone conclusion.

Step Two

Formally invite employees at risk of redundancy to individual consultation meetings. In these meetings, you must explain the reasons for redundancy and ask the employee if they can see any ways of avoiding the situation. Employees must be advised of any suitable alternative positions within your company, in addition to their right of appeal against redundancy.

Step Three

Issue notice of dismissal letters to all employees, and advise them of any outplacement support to help them search for alternative employment outside the company.

Consider bringing in a Consultant for specialist support, to help you and your HR Department to:

• establish an elected employee consultation forum
• develop the redundancy/restructuring plan
• devise an appropriate communication strategy
• create all relevant letters and underpinning documentation
• provide support in individual consultation meetings
• provide outplacement services for affected employees

While initial reactions to redundancy are always negative, by following a fair process, correct procedures and with clear, transparent communication, you can achieve considerable protection to your employer brand.

If you are planning redundancies and need guidance in ensuring you have the correct process in place, give us a call on 0800 0482 737 and we’ll arrange for one of our experienced HR Consultants to work with you.