The MOD has just announced that there are to be 5,000 more redundancies in summer 2013.  This follows a gradual reduction in the number of troops the UK maintains, with yet more to come so that by 2020 there will only be 10,000 in total.  This is all part of a drive to help cut the deficit.

When managing redundancy there are key things that the MOD along with any employer needs to know.

1. Ensure the Redundancy is Genuine 

An employment tribunal can investigate whether the redundancy is genuine, ie the real reason for dismissal so do not be tempted to dress up a performance or capability dismissal as a redundancy. This could result in a finding of unfair dismissal.  Before starting the process assess if you could avoid making redundancies by considering whether cutting overheads or restructuring via salary cuts, shorter working weeks, job shares or unpaid sabbaticals could save jobs.  You could also consider offering voluntary redundancy with a possible enhanced package to encourage employees to come forward.  The needs of the business are the most important thing however and you do not  have to give voluntary redundancy if you wish to keep valuable members of staff who volunteer. 

2. Ensure you follow your own redundancy procedures

If you have a company redundancy procedure, make sure you follow it.  An employment tribunal will be very interested in whether you have a policy and that you have followed it.  If you don’t follow it you could be penalised for doing so.

3. Ensure you have you worked out your pools for selection

Ensure the proposed restructure is set out so it is clear from which departments or groups of employees redundancies are being made.  Consider which jobs are at risk and identify the groups of employees who are doing similar jobs where the redundancies may be made (the pool).  

4. Ensure selection criteria for redundancy is fair and objective

Devise a redundancy matrix to select who may be made redundant using selection criteria which is capable of being measured.  It must be non-discriminatory. Reflect the needs of the business when selecting who may be made redundant.  Selection criteria can include skills, experience and performance.  Sickness absence can be taken into consideration but be careful in case there may be disability discrimination slant on that.  

5. Ensure you consult correctly 

Consultation should be meaningful and correct.  Once you have identified which employees are at risk of redundancy, they should be advised of this and told the length of the consultation period; this will vary depending on the proposed number of employees possibly being made redundant.  With less than 20 employees the consultation period is not stipulated in employment legislation so the timeframe can be flexible, however, do not rush this process.  With 20-99 employees the consultation period must be 30 days before the first dismissal.  With 99+ employees the consultation period is currently 90 days but from April 2013 this will be reduced to 45 days.  It is important to include employees on long-term sick leave or maternity leave in all consultation discussions.  Employee consultation meetings should be face to face and should be a two way process. 

 

6. Consider Ways to Avoid Compulsory Redundancy

Discuss and give serious consideration to any suggestions made by employees that you have not considered – eg early retirement, freeze on overtime, ban on recruitment, terminate agency temps.  Employees can sometimes come up with some creative ideas. 

 

7. Look at suitable alternative employment

 

With each employee at risk of being made redundant if possible try and look for alternative employment elsewhere within the company – this is sometimes more possible with larger companies.  It must be deemed to be mutually suitable with a four week trial period being offered to consider suitability by both employer and employee.  If the trial period does not work out the employee may be made redundant with compensation if appropriate.   If the employee refuses to accept reasonable suitable alternative employment they may lose the right to redundancy compensation. 

8. Ensure you correctly calculate redundancy payments

 

Don’t forget to work out the cost of contractual notice or payment in lieu of notice and redundancy payments. Statutory redundancy payments are based on length of service, age and salary, subject to a current statutory cap of £430 a week; this will rise to £450 from 1 February 2013. Employees need to have two years continuous service to be eligible for redundancy pay.  If the employee earns less than the statutory figure then you calculate the figure based on gross actual pay.  Check employees’ contractual, policy and custom and practice rights to redundancy payments as there may be a right to enhanced redundancy payments.   Untaken holiday also need to be calculated and paid.  Bonus and commission payments may also be due.   Notice pay will also need to be calculated if the notice pay is not being worked.  Redundancy pay is untaxed up to a maximum of £30,000, however holiday pay, notice pay and bonus’ are taxed. 

 

9. Set up a Dismissal Meeting

 

If compulsory redundancy can not be avoided organise a dismissal meeting and confirm in writing giving the right to be accompanied.  Confirm the decision to terminate employment during the meeting.

 

10. Give the Right to Appeal

The termination letter should set out the terms of appeal to a more senior manager providing the right to be accompanied.