The COVID-19 pandemic and the cost of living crisis have created a challenging time for businesses, and as various industries evaluate their cash-flow situation, many employers are still making difficult decisions concerning their staff.
Unfortunately, for some businesses, redundancy may be the only option. Even the most diligent employer can get caught out by redundancy pitfalls.
Head of HR, Bal Dhesi, shares her overview of a few things you should consider to help guide you through the process.
Please note that this article will focus on the individual rather than collective consultation.
Planning Stages
Be clear on your reasons for redundancy and focus on roles.
A redundancy situation might occur if a position no longer exists within the business due to the following:
- Changes in the way in which your company now operates
- Investment in new technology or machinery leaving a role that is no longer necessary
- Relocation or closure of a business unit
So, start by assessing whether redundancy is inevitable before you begin the process.
Regardless of the employee’s length of service, you must show that there is no other resolution to the matter other than through redundancy.
In our experience, the main reasons for redundancy in small businesses relate to cash flow problems, restructuring, or changes to the way the company needs to operate.
During your planning stages, it is advisable that you do not draw up a list of names but, instead, focus on the roles required within the business.
If you start noting names down, this information may be disclosable in any subsequent tribunal proceedings and can demonstrate that the process was pre-judged whilst running the risk of an unfair dismissal judgment being made against you.
A word of caution: the current climate cannot be used as an excuse to terminate under-performers – remember, it should be a genuine redundancy.
If the decision is challenged and an unfair dismissal claim is made, the employer must demonstrate that the role was correctly deemed redundant.
A redundancy plan will help you manage each stage of the redundancy process and show how you’ll:
- avoid compulsory redundancies
- consult staff
- select staff for redundancy
- give staff notice
- work out redundancy pay
- support staff and plan for the future
Consider alternatives to redundancy.
Before making any redundancies, explore alternatives to redundancy.
For example:
- Could you put a freeze on recruitment?
- Would a freeze on salary reviews or overtime help the business or the situation?
- If you have temporary staff, do you still need them?
- Would short-time work be an option?
- Explore whether, as a temporary measure, you could reduce the working hours.
- Could you offer voluntary redundancy?
If the above options aren’t viable, proceed with your redundancy plan(s).
Identify your selection pool and apply fair selection
Two key things to note here.
First, employees should be treated fairly and equally.
If you need to make three sales consultants redundant, consider all sales consultants across the business and include them within the pool of people at risk of redundancy. The redundancy selection pool must incorporate the correct group of employees.
Second, do not automatically select furloughed staff for redundancy.
Failure to identify all employees at risk will result in a flawed process and may lead to claims of unfair selection.
Ensure that you apply a fair process by using objective redundancy selection criteria, such as skills and standard of work. Your best approach is to share the draft selection criteria with at-risk employees during an initial group meeting.
You should explain how the criteria are applied and invite employees to comment.
With employees working in standalone positions, the selection criteria are not applicable. Review the job specification to check no one else in the business is in a similar role.
Meetings
When considering redundancies, employers must demonstrate that they have acted reasonably and have adopted a fair process, including the legal requirement to consult with the affected employees.
If an employer fails to consult in a redundancy situation, redundancies will almost certainly be unfair, and an employer could be taken to an employment tribunal.
Therefore, ensure that you carry out meaningful consultations/meetings and do not prejudice the outcome, share information with the employee(s) and listen to any comments raised.
You never know, one of your team may have a great idea as to how you could avoid the need for redundancies!
Be open and transparent on everything that can come up during consultation and use it for the correct purpose to ensure that all relevant factors are considered before making any final decisions.
There is no set number of meetings that must be held during the individual consultation process. However, a fair procedure typically includes at least two consultation meetings with the individual. You may find that more consultations are required depending on the questions asked or suggestions put forward.
- a) Group meeting
In group meetings, share as much information as you can.
Explain the rationale for the proposed redundancies, share the proposed number of redundancies, outline alternatives you have considered and details regarding the “pool” affected, and provide a copy of the draft selection criteria whilst explaining how the scoring will work and what will happen next.
- b) Consultation meeting
Once you have had the group meeting, hold an individual meeting with those in the selected ‘pool’.
Confirm the details in writing and advise the employee of their right to be accompanied. Ask your employee for comments on the criteria, explain how the scoring process will work and share additional information, such as redundancy entitlements.
Do also discuss whether there are any suitable alternative vacancies which can be offered.
- c) Second consultation meeting
Once you have scored those in the selected “pool”, host a meeting with those at risk of redundancy.
Once again, confirm the meeting in writing and advise the employee of their right to be accompanied. Go through the selection criteria and explain how the individual was scored (you do not have to disclose anyone else’s score).
Ask for feedback and allow the team member to question how their score has been reached. Follow up on any questions relating to any suitable alternative vacancies.
If any points are raised, explain that you will consider these concerns before the final decision. If necessary, you can adjourn the meeting and reschedule for a later date to go through these raised issues.
If no issues are raised, or the team member has no further points to make, advise the team member the redundancy decision is confirmed.
Again, follow up the final meeting in writing, confirming the reason for termination and outlining the redundancy terms, notice period and any associated benefits.
I am often asked how long should the consultation period last – there is no statutory fixed consultation period if you are making fewer than 20 employees redundant. In my experience, in straightforward cases, you could complete the process in approx two weeks.
Where you have a larger pool of employees, it may take longer.
ACAS notes that “if you are making 20 to 99 redundancies within 90 days in 1 workplace – you must begin consultation at least 30 days before giving the first redundancy notice. If you have 100 or more redundancies within 90 days in 1 workplace – you must begin consultation at least 45 days before giving the first redundancy notice”.
Include an appeal process.
In the termination letter, include the right to appeal.
Should an employee appeal, this will be an early warning that the employee is unhappy with the process. It can help to deal with any complaints early, thus mitigating the risk of an employment tribunal claim.
Conclusion
Remember that it is good practice to ensure regular, open and transparent communication throughout the redundancy process.
If you mishandle redundancies, you can easily face unfair dismissal claims that will be hard to defend.
Common pitfalls relate to:
- Not following the correct procedures or departing from the published timetable
- Using unfair redundancy selection criteria or methods
- Failure to consult with the individuals involved
Redundancy legislation changes
Under the new proposed legislation, expectant employees will receive protection from redundancy during pregnancy.
In March 2023, the House of Lords will hold a second reading of the Protection from Redundancy (Pregnancy and Family Leave Bill. The initial consultation found evidence that new parents regularly faced workplace prejudice with an estimated 54,000 new parents forced to leave jobs due to maternity or pregnancy discrimination.
If introduced, the new regulations will enable redundancy protection to apply to employees from the moment they inform their employer that they are expecting a child and six months after returning from maternity. Parents taking adoption or shared parental leave will also receive protection whilst on leave, and for 18 months after their return to work.
When an employee is on maternity, adoption or shared parental leave, an employer must give that employee first refusal on any suitable alternative roles.
Whilst the Bill is progressing through Parliament, it is unclear when this legislation will come into force. Employers should be mindful of their obligations towards employees expecting a child and act accordingly.
Are you currently making difficult decisions around redundancy?
We deliver practical HR support and guide you through the process, from creating a redundancy plan and timeline and assisting with the selection criteria to preparing the relevant paperwork and calculating redundancy payments.
If you need assistance with any of the points raised in this article, email Balbir.dhesi@wildercoe.co.uk or give us a call at 0207 724 6060.
