Spotlight on Redundancy

As the new financial year has just begun, circumstances may change in your business which means that you may have to consider reducing personnel or closing a department or in some cases the business.  As a business owner/Manager it is important to plan ahead and if redundancy is a consideration, read on to learn the pros and cons of Redundancy and how to avoid a potential unfair dismissal claim at an Employment Tribunal.

It’s an actual thing!

Contrary to popular belief redundancy is a legal process; it is not a quick fix or a useful term to throw out there as a way to let someone go.  Many an employer has suffered the annoyance of paying out an award to an employee by failing to follow a correct process which in some cases could be just one or two steps away from perfect.  As an employer, you have a duty to avoid redundancies if at all possible so here’s what you need to know should you have to consider the ‘R’ word.

Genuine Reason You can make redundancies where:

1. 1. The number of people doing that job is to be reduced but not eliminated i.e. fewer people are required to do the job
   2. You are eliminating the work the employee does so that the job disappears entirely
   3. You are shutting down the department or area where the employee works so that the place of work disappears
   4. You are shutting down the business entirely so that the business disappears

It’s important to be aware of situations where it may seem like a redundancy situation when in fact it is not – for example merging the duties of one job into another is not necessarily a genuine reason or if the reason you need to reduce employee numbers is due to you selling or taking over a business.

Ultimately it is the Business that has to justify its reason for the use of redundancy if you cannot explain and prove your reason it could call into question how genuine it really is.

Alternative work avoids redundancy

As with any process that requires the loss of employees, it is always important to consider all the other options before redundancy, failure to consider alternatives could leave the business open to a potential claim for unfair dismissal so it’s always good to stop and think “can i redeploy them elsewhere to avoid loss of employees”, “are there current vacancies”, “Could short term working help, or  “Could laying off staff for a short period of time allow you to avoid redundancies”.

Fail to plan = plan to fail 

You wouldn’t buy a new business, or take on a tender without going through the terms and paperwork with a fine tooth comb – Redundancy is just the same.  Planning how many people will be at risk, which departments will be affected and why, need to be carefully thought out before you make any announcements.  Getting this stage right from the onset will always help you justify your process where it is to be called into question.

Unfortunately waking up one day to call those employees you have selected into an office and tell them they are redundant and then let them go, is a plan that will certainly fail and open the floodgates to a claim.  Allow yourself the time to consider the process, what needs to be done, how it can be done and when.  That way when you have planned it out,  implementing it will be the easy part.

It’s good to talk

ACAS has been quoted as saying “Those who are consulted with effectively and fully understand what is involved and how they may be affected by the process are more accepting of the end result, whether they are made redundant or remain to deal with the changes in the business.” This means that employees are less likely to bring a claim against the company at an employment tribunal.

Consultation is important and allows you to get the thoughts of those employees who are at risk of losing their roles.  The purpose of consulting with the employees is to ascertain if redundancies could be avoided whether that is through alternative employment or a reimagining of the role to suit the business needs.  It is also to identify if there are any potential grounds for the selection of employees been seen as unfair or if others should be included who are not

Consultation should be meaningful, and your paperwork needs to show this – as such it’s important you take notes on what has been discussed at all times and get the employees to sign them to confirm they agree with the minutes taken.  As a rule you should factor in at least three consultation meetings after the announcement with a break of at least two days in-between each meeting – not only does this give you time to consider what has been discussed but also allows you time to talk it over should anything be raised that you are not comfortable with.

Selecting the best people for the business

Whilst it can be difficult to let people go, the main purpose of redundancy is to maintain the business and in order to do that you retain the best people that will help take the company forward.  In situations where you are reducing the number of roles within an area or department, it’s important to remember that everyone who undertakes that work will be at risk and that the selection process will be the means to select who remains and who should go.  When you are choosing a selection matrix it needs to be fair, objective and unbiased. Here are the main points you can look to score and compare employees against:

1. 1. Disciplinary record
   2. Skills or experience
   3. Standard work performance
   4. Aptitude for work

You should not use attendance especially if some of those who are at risk have been off work due to sickness as this could be seen as discriminatory especially if the sickness could be seen as a potential disability. When you undertake scoring a matrix always leave room for manoeuvre – employees have the opportunity during the consultation to discuss their scores and what others have scored against them albeit anonymously, and make suggestions as to whether scores should be changed to what and why.

You are not alone

Hopkins Solicitors can guide you through all the problems and ensure that you have a process that will not only help you achieve your goal but also prevent a potential tribunal claim.  Contact our Employment Department who will be there to support you and make things possible.