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Kevin Charles

Crossland Employment Solicitors

Director

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Your 10-step survival guide to making redundancies

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Why me? Is a question common to any HR professional that has had experience of handling redundancies. It is often the first thing an employee at risk of redundancy will ask and is often fuelled by emotion, indignation and a sense of injustice. The wrong response can easily inflame the employee’s sense of dissatisfaction and increase the risk of a tribunal claim; whereas the right response is likely to diffuse tensions, restore the employee’s trust and decrease the risk of ending up in a tribunal. However, it is not easy to navigate the myriad of statutory laws and ever changing case law in the field of redundancy; but the following 10-step guide will steer anyone having to make redundancies in the right direction.

Step 1: Avoidance.

Consider ways to avoid redundancies. This does not mean burying your head in the sand but looking at practical steps to make cost savings, for example, without having to make redundancies. This could include a freeze on recruitment, terminating the contracts of agency workers and allowing fixed term contracts to expire without renewal. However, be aware that selecting fixed term workers for redundancy, prior to the expiry of their contracts, solely because they are fixed-term workers will be viewed as unfair selection and discrimination.

Step 2: Plan of action. 

The old mantra that “failing to plan is planning to fail” could not be truer in this situation. Start by making sure that there is a ‘genuine redundancy’ situation. One of the basic hallmarks of a fair dismissal for redundancy is that there is a genuine redundancy. The law provides a very specific and technical definition of redundancy, which includes:

i. Closure of the business;
ii. Change of location of the business;
iii. A reduced need for employees carrying out ‘work of a particular kind’.

This third limb of the definition would cover the typical situation where due to a downturn in the amount of work available or orders the business needs fewer people; but it also covers the situation where, for example, there may be more work available but due to technological advances the business requires fewer staff. 

If you do not have a ‘genuine redundancy’ then it may still be a fair dismissal as it may be a ‘business reorganisation’ which may result in the need for staff with different skills. This would be a dismissal for ‘some other substantial reason’

Next, it’s important to decide on the proposed number of employees to be made redundant. If 20 or more redundancy dismissals are planned within a 90-day period, you will need to follow the rules for collective consultation, which will involve consulting with any recognised trade unions for minimum periods. Where there are no recognised unions, you need to consult with elected employee reps and send  an HR1 form to Business Innovation and Skills (BIS). The law is still unclear as to whether an employer should count all redundancies across its business or only those at each ‘establishment’ i.e. factory or shop. Although it is looking as if it is going to be the latter. The final decision of the European Court is awaited and so until then employers should err on the side of caution and count all redundancies across the business.

Check employment contracts and staff handbooks to see if the company has to follow any contractual redundancy procedure or policy. Then decide who will break the news to the employees, what information to share and how; who will conduct any consultation meetings, appeal meetings and whether any enhanced redundancy payments will be made. Drawing up a Q&A document can be useful to share with employees at risk.

Ensure that all employee files are in order and up to date, which is essential if any selection criteria is based on performance, skills, attendance and disciplinary records. Finally, draft any template letters and consultation meeting forms that will be used throughout the process.

Step 3:  Selection criteria.

Going back to our rhetorical, why me, question, employees at risk very rarely agree with their selection and will often point to a colleague who they think should have been chosen before them. Firstly, identify the ‘pool’ from which employees will be selected. As a general rule, the ‘pool’ should include all employees who are carrying out the same or similar role or where the roles are interchangeable.

Secondly, draw up the selection criteria that will be applied to all those in the ‘pool’ which should be objective and based on verifiable records such as attendance, disciplinary records, appraisals/PDR’s. However, the tribunals accept that there will often be a degree of subjectivity involved in carrying out redundancy assessments.

A selection based solely on one criterion such as ‘last in first out’ will be unfair but may also amount to age discrimination and those with under two years’ service can bring a claim for discrimination.

Step 4: Breaking the news!

Hold a group meeting with all the employees affected or, if there are smaller numbers, hold initial informal individual meetings with the employees at risk. You should allow the employee to be accompanied by a colleague or trade union representative to each formal consultation meeting.

Do not neglect employees on sick leave or maternity leave and you may need to consider how to handle any publicity.

Step 5: Consultation.

The buzz words here are ‘adequate and meaningful’. This means that the employee(s) at risk should not be just presented with a fait accompli and told what has already been decided. They should be informed of the redundancy proposals, when they are at a formative stage, and given an opportunity to ask questions, make suggestions and seek clarification.

At this stage no definite decisions have been made and there is a chance that as a result of consultation the company decides not to proceed with the redundancies. Share with them the proposed selection criteria if the proposals do go ahead and ask for feedback. Apart from the specific requirements surrounding collective consultation, there is no set minimum period of time that consultation should last but as a guide at least two formal consultation meetings should be held and anything less than a week would appear rushed and insincere.

A letter should be sent to the employee summarising the consultation meeting, enclosing a copy of the notes for the employee to sign, date and return, and informing the employee of the next steps.

Step 6: Keep a record.

In the unfortunate event that despite your best efforts the matter ends up in a tribunal it will be essential to show a good ‘paper trail’ of what actually happened and what was said each step of the way from the minutes of meetings where the need to make redundancies was discussed to signed and agreed notes of each consultation.

Step 7: Apply the criteria.

The most appropriate person to apply the selection criteria will be the person that knows the employees best, usually their line manager. However, in order to avoid any allegations of bias, it would be sensible to have the selection scores moderated by HR. In applying the criteria care needs to be taken to ensure that there is no discrimination, for example, any absence related to a ‘disability’ or ‘maternity related’ should be discounted.  Send the scores to the employee who has come out the lowest before the next meeting, to give them a chance to consider them.

Step 8: Be prepared for challenge.

Meet the employee to confirm that they have been selected for redundancy and give them an opportunity to challenge their scores. 

Step 9: Alternative employment.

This is essential in establishing a fair redundancy dismissal. Whilst an employer would not be expected to create a role that did not exist, they would be expected to take reasonable steps to consider whether there might be any suitable alternative roles within the business. This duty applies from the moment the employee is placed at risk to the point their employment is terminated. The employee also has the right to a reasonable amount of time off to look for alternative employment outside of the business and they should be notified of this at the outset of the consultation period. If the employee is on maternity leave you must offer them any suitable vacancy without competitive interview and must take positive steps to find them new roles.

Step 10: The Outcome.

If the initial search for alternative employment has come to nothing then the time has come to notify the employee of their redundancy. If they are working their notice then you can continue to look for jobs for them during this time. Notifying the employee of their redundancy should be done face to face and followed up in writing. The employee should be informed of their right to appeal against the decision, the timescale and to whom any appeal needs to be addressed. The letter should confirm whether the employee will be required to work their notice or be paid wages in lieu and set out the amount of any payments, such as statutory/enhanced redundancy payments, accrued holiday pay etc. The amount of any statutory redundancy pay and the calculation must be done in writing and failure to do so is a criminal offence!

Finally, if any enhanced redundancy payments are being made it would be strongly advisable to do so via a settlement agreement.

Hopefully, having carefully followed the above steps you will be able to respond confidently to any ‘why me’ questions and minimise the risk of any tribunal claims.

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Kevin Charles

Director

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