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Yule be redundant: Crisis at Christmas

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ChristmasHaving to make people redundant just before Christmas is especially hard, but is it best to play Scrooge on Christmas Eve or wait until the new year to impart the ill tidings? Annie Hayes talks to the experts.


Sensitivity

Redundancy is obviously big news at the moment, especially during the current economic climate, so how can employers faced with making redundancies handle the situation sensitively and avoid a punch-up over the mulled wine?

David Green, chief executive officer at MTA Solicitors, says it’s all about consultation: “Whether you have five or 100 employees it is important to keep them up-to-date and in the picture, giving as much advanced warning as possible. Make sure your employees know and understand the situation and that they could be at risk.”

“Whether you have five or 100 employees, it is important to keep them up-to-date and in the picture, giving as much advanced warning as possible.”

David Green, MTA Solicitors

According to Green, keeping employees involved prevents the rumour-mill causing further damage to morale: “Together you might be able to work out which departments can be slimmed down; staff may be willing to cut hours rather than lose their jobs. A tribunal will not criticise how a business is run; only the way its employees are dismissed.”

Lauren Stanley, associate for employment at Norton Rose LLP, says as well as having a robust communication policy in place, it is essential to plan: “Employers should plan well ahead and ensure that they are aware of the legal framework within which they must proceed. If unsure, employers should seek legal advice.”

Planning, says Stanley, starts with ensuring that those who are handling the bad news are properly trained and supported. It’s a proposal that Olwyn Burgess, director of client services at consultancy Chiumento, agrees with: “The way to do it is to follow a process, so you are organised and have a plan. When it’s badly organised it’s the worst thing. The leavers don’t believe the motives are robust and it could increase the risk of tribunal whilst those that stay might be inclined to look elsewhere.”

Timing

So is it best to wait until the new year, or should employers put redundancy procedures into action at the earliest opportunity?

A Cheshire-based law firm recently caused considerable controversy by saying that Christmas is the time to drop the axe. Mark Bestley, of SAS Daniels Solicitors LLP, says that letting somebody go on Christmas Eve can be a massive blessing in disguise for all concerned: “There are different groups of people to consider in all this – the person made redundant, their colleagues and the company itself. I would actually recommend that people who may be a nuisance or disruptive to a business are told they’ve lost their job as close to Christmas as possible.

“I would actually recommend that people who may be a nuisance or disruptive to a business are told they’ve lost their job as close to Christmas as possible.”

Mark Bestley, SAS Daniels Solicitors

“Whether intentionally, knowingly or not, there are always people on a workforce who cause difficulties – and they are more likely to destabilise a business and its staff if they are kept in the business unnecessarily.”

Yet it’s not a plan that everyone agrees with. Stanley says the majority of people would probably disagree that Christmas is really the best time to make redundancies:

“Unless there are accounting, commercial or other business reasons driving the process which, unavoidably, require that the cut-off date for redundancies is prior to the new year, then ideally employers should wait.”

The problem, says Stanley, is that undertaking a redundancy procedure over the Christmas period is very demoralising for staff, including retained staff who may question whether they are working for a ‘decent’ employer and whose morale may remain low following the Christmas break: “Importantly, employers also run the risk of huge damage to their reputation from negative publicity. Employers should not take such a decision lightly.”

Burgess sympathises with both approaches and says that whilst making people redundant before Christmas allows them to adjust their spending accordingly, it doesn’t necessarily make those who have been kept on feel any better when they return after the break.

Yet Stanley admits that legal requirements for carrying out large-scale redundancies of 20 or more employees, which requires employers ‘proposing’ redundancy to start consultation, may force a decision: “In this sense an employer may not be able to delay the process. A failure to comply with this legislation may result in financial penalties being incurred by the employer amounting to 90 days pay per affected employee.”

For many employers, therefore, the fear of further payouts may force a decision to fall on the cusp of Christmas, after all the compensatory award for a successful unfair dismissal claim is currently capped at £63,000.

Process

“Unless there are accounting, commercial or other business reasons driving the process, which require the cut-off date for redundancies is prior to the new year, then ideally employers should wait.”

Lauren Stanley, Norton Rose

Failure to follow the right procedures is often the biggest headache for employers who have decided that redundancy must go ahead. Green advises employers to examine their notion of redundancy: “A business must only dismiss an employee if they are genuinely redundant; otherwise the company could be sued for unfair dismissal. A genuine redundancy situation arises when a company has ceased to operate, has moved to a different place or the companies’ need for work of a particular type has ceased or diminished, or is expected to.”

Statutory procedures must also be followed, adds Green, including writing to the employee to let them know they are at risk of losing their job, consulting with the employee, inviting them to a further meeting if no alternatives are found and confirming the outcome.

“Employers should let the employee know that they are entitled to have a representative with them at the meeting that can either be a work colleague or trade union representative,” says Green. A right of appeal must also be communicated and if taken up it must be arranged with the employee who should then be advised in writing of the final decision.

Selection

A crucial element of getting the redundancy process correct is following the fair reasons for selection. Green says: “It is not recommended to use ‘last in, first out’ (LIFO) and it is important to note that part-time employees have the same statutory rights and protection as full-time employees.”

Green advises using a selection criteria based on a points-based system to work out general performance and what each individual brings to the business: “Employers should look back over the annual reviews, attendance and disciplinary record.”

Stanley gives further warnings against the LIFO policy which has been popularly used in the past: “Firstly, it may constitute indirect sex discrimination. Secondly, it may amount to indirect age discrimination under the Employment Equality (Age) Regulations 2006 (the Age Regulations). A policy of LIFO will, in general, put younger workers (who often have shorter service due to their age) and female employees (who often have shorter service due to having career breaks for childcare) at a disadvantage and will thus be unlawful unless justified as a proportionate means of achieving a legitimate aim. Importantly, liability for discrimination is uncapped.”

Boosting morale

Green admits that keeping employees motivated throughout the whole process is a struggle, but says that communication is once again the key: “If employees know the full picture and they feel there is a solid plan in place they are more likely to stay committed especially if the situation is explained clearly and indecision is minimised. This solid plan holds hope for future.”

Ensuring that the business recovers and moves on from the events that have taken place is vital, however. “Supporting and motivating those left behind is a key aspect of this,” remarks Stanley. “Indeed, failure to do so may make or break the cost-cutting efforts implemented. It is however something that is often forgotten.”

Ways in which staff motivation can be enhanced include good communication and offering more flexible working patterns, as well as providing an employee counselling service and increasing the level of staff training and career development so as to increase self-esteem. Following a full, visible and equitable redundancy procedure should also assist an organisation in mitigating the worst effects of a redundancy situation.

It’s about showing survivors what the future will look like. From the darkest hours, there must always be the glimmer of hope and conveying that message is the job that many will be faced with over the Christmas period.

One Response

  1. Earlier
    Buried within this otherwsie excellent article is the answer to the question of whether to start consultation now or after christmas. The answer is now.
    the run up to Christmas may be busy but that is no excuse for not starting consultation as soon as possible. There is masses of case law on the subject of what this means and you may be lucky in that employees informed after Christmas may not ask why you did not strt earlier but they might and ” we did not want to dampen the Christmas spirit” may work with some Tribunals but not many.
    There are two other good reasons.
    Information leaks and it is better to plan your communication rather than have rumours, denials and hastily put together plans because it is not possible to deny them.
    january and February will be even quieter so for most employers so you ought to be going into these months with the minimum level of stffing.
    The most important reason though is legal and if you want a case to quote then Elkouil v Coney Island makes good reading

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