Redundancies – Top Tips

The Background

Some employers have already had to make redundancies.

As the Furlough scheme winds down many more employers will be faced with the same difficult decision.

Most employers are good people who will make redundancies only as a last resort and will want to deal with them as sensitively and compassionately as possible.

However, we mustn’t forget that many businesses have been badly affected by the pandemic and their first priority will be to make sure that the business can survive and rebuild as the economy starts to reopen.

In this short piece we set out some guidance for employers on how to plan for and implement redundancies.

What are the numbers?

If you are making 20 or more redundancies at one site you have to engage in “collective consultations” with representatives of affected employees, before you can start individual consultations and then move on to dismissals.

This will take some time and involves a number of mandatory steps.

If we get any of those steps wrong, we can face a penalty of up to 3 months pay for each employee.

If we can avoid collective consultations, by limiting the numbers, we should try to do that.

Is there or is there likely to be a redundancy situation?

If we are looking at a smaller number of redundancies the next thing we should do is work out whether a redundancy situation actually exists or will exist.

This should be obvious where we need to cut a large number of staff.

Why does it matter?

If we make someone redundant but the Employment Tribunal finds that it wasn’t in fact a redundancy situation – which can happen where we are restructuring and some jobs in the new structure are not so different from some current jobs being made redundant – those dismissals could be unfair.

Redundancy Policy?

Do you have a redundancy policy and is it binding?

If you do, and it is, it might tie your hands as regards things like selection criteria or oblige you to pay enhanced redundancy payments.

Redundancy policies are a bad idea. If you don’t have one, don’t introduce one.

Should we invite volunteers for redundancy?

Unless you are bound by a redundancy policy, no.

Think carefully before asking for volunteers.

Often, asking for volunteers is a bad idea.

You may get volunteers who you do not want to lose or who will cost you a lot in notice and redundancy pay.

But, in some situations, if the request is worded carefully, it can reduce the number of compulsory redundancies.

Do we need a Pool?

We may not need a pool if employees affected are in unique roles.

If a pool is required we must be able to show we have considered who should be in the pool.

But, we do have some flexibility when deciding who we can keep out of the pool and so keep safe from selection – e.g. people with certain skills or experience, customer relationships etc which we cannot afford to lose.

Selection criteria

If we have a pool we need to devise criteria against which we will score each employee in the pool.

These days it isn’t necessary to have objective criteria – such as discipline; attendance; productivity.

Those criteria were appropriate in a different era – industrial era – where components of the job could be measured objectively.

We may want to use more nuanced criteria which accurately assess employees’ ability to perform key functions of their roles.

To help ensure impartiality, if our criteria are subjective, use two assessors/scorers.

Consultations

Once we have done our provisional scoring/selecting we then need to get on with actually implementing the redundancies.

We need to consult with individual employees.

If we have a pool we don’t need to consult with everyone in the pool – just those selected.

As a general rule, consultations should be for a minimum of a week or two – unless an employee wants to short cut it.

Termination

We will confirm termination in writing, offer an appeal, and set out financial entitlements including notice and statutory redundancy pay.

Settlement Agreement?

At the first meeting we could offer an enhanced redundancy payment – in the event they are made redundant – provided they sign a Settlement Agreement.

We can include this in the initial letter.

We aren’t prejudging the consultation process, just offering something extra in case they end up being made redundant.

Most people will want to accept the extra money and cut short the process. This saves us time and ensures there isn’t a claim at the Employment Tribunal.

Alternative Employment

We have an obligation to offer to employees selected for redundancy any available vacancies within their skills and capabilities.

We may have to do some interviewing if the number of redundancies exceeds vacancies.

Trial Periods

Where we offer suitable alternative employment and the employee accepts, they have a 4 week statutory trial period in that job. If it doesn’t work out either party can end the trial and the employee will receive their redundancy payment.

Planning

The key to success in making redundancies is careful planning.

Choreograph the whole process and prepare draft letters and meeting scripts before we speak to the first employee.

Help and Advice

If you have to make redundancies as a result of Covid 19 or otherwise please give us a call or send us an email and we can have an initial chat with you, without any charge, to talk through what you have in mind and how we can help.

E – rayner@raynerjones.uk

T – 01202 932944