How to Plan for a Redundancy Situation

Redundancy

When you are considering how to plan for a redundancy situation in your business, there are some important factors you need to consider so you stay legally compliant. Our redundancy planning guide takes you through the key steps you need to take to ensure the process runs as smoothly as possible.

1 in 5 employers are looking to make redundancies

According to an Acas poll, one in five employers are considering making staff redundancies over the coming year (2022 – 2023). A survey conducted by YouGov of 1,074 senior business leaders found that 18 per cent were looking to reduce their headcount over the next 12 months. 30 per cent of large businesses with 250 or more employees reported being more likely to make redundancies when compared to SMEs.

The ripple effect of redundancy

Before you decide on your redundancy strategy, it’s crucial to consider the impact. Redundancies will not only affect the employees to be made redundant, but also their colleagues and your business culture in general. Acas urges employers to be “compassionate” and to “exhaust all possible alternatives” before resorting to redundancy. Employers that fail to act with compassion are more likely to face unfair dismissal claims.

You can only make a role redundant not a person

When considering how to plan for a redundancy situation, some employers mistakenly believe they can make someone redundant, but in fact it is the role itself which has to be made redundant from a legal perspective. So, before you decide on reducing your headcount, you need to make sure the role itself is no longer required. You will then need to follow a fair consultation procedure. Employers also need to consider if there is any suitable employment elsewhere in your business that the person could do.

How to plan for a redundancy situation – checklist!

There are certain legal requirements you will need to adhere to when it comes to making redundancies. We have listed some of these below:

  • Establish whether the role is genuinely redundant – this could be due to a financial downturn, a changing market, or a restructure due to different needs or skills. Seeking to identify a role as redundant when in fact it’s a poor performer who has not been managed will give rise to a potential employment tribunal claim.
  • Preparation –  Preparing for a redundancy situation can be very timely, especially where selection criteria are required. Employers need to check their redundancy procedure, identify the business case, consider the timing of the process, factor into account all of the redundancy payments and notice pay and that’s just some of the tasks.
  • Try to find alternative work – part of the consultation process is to seek suitable alternative roles and identify vacancies within the business. Consider roles in other areas of the business, even if this means a difference in salary or responsibility. If an employee refuses the offer of ‘suitable alternative work’ they will not be entitled to a redundancy payment. In reality, refusal of such work is unlikely to be deemed ‘unreasonable’ as this is subjective to the employee’s view of the role.
  • Selection criteria* – you must be able to explain the reason for your selection criteria. A fair and transparent selection process needs to be agreed to determine which roles and subsequently which people will be made redundant.
  • 20 or more redundancies – if this is being proposed within a 90-day period, you must consult with a trade union or other workplace representative. This needs to be at least 30 days before dismissal. If you are planning 100 or more redundancies, then consultation needs to start at least 45 days before (Acas). Don’t forget to factor in a couple of weeks (approx) to run an election campaign for employee representatives.
  • Right to appeal – whilst there is no statutory right in respect of appealing selection for redundancy, it is good practice. Generally, a robust consultation process will provide the opportunity for an affected employee to raise concerns which would generally sit under an appeal process. If you have an appeal process in your redundancy procedure then you must follow it.
  • Employees with 2 years of service – are protected from unfair dismissal, any failure to follow your own procedure may render the process unfair.
  • Right to be accompanied – there’s no statutory right to be accompanied at meetings in connection with a redundancy procedure, although it is good practice and recommended.
  • Redundancy payments – this can be complicated and you can discriminate by trying to enhance payments for employees. Do you know what it means by a ‘week’s pay’ and what’s meant by it being capped?

Selection criteria* is one of the main areas challenged by employees when they are made redundant. If this is not carried out in a fair manner, employers could face costly claims for unfair dismissal and discrimination. Read more about the redundancy process

Employers need to be open and honest

Although the circumstances might seem difficult when you are trying to convey the company’s position and need to make redundancies, open communication with your employees is key. Aim for meaningful consultation with your employees about the current situation. Acting with transparency will help to break down any barriers and employers are more likely to be met with understanding from employees, who will feel more valued.

Supporting employees through a redundancy

When considering how to plan a redundancy situation, don’t forget to consult absent employees, who may be on long-term sick, or women who are on maternity leave. If your organisation is likely to be experiencing a high volume of staff redundancies, then consider how you can support employees through this period of transition. You may need to put certain measures in place that focus on employee wellbeing and ways to boost team morale. Also, pay close attention to your offboarding process.

Do you need help with redundancy planning?

Jude Read-HR can provide your company with commercially minded HR advice to help you plan and proceed with a redundancy process. As your dedicated HR partner, we will talk you through all your responsibilities as an employer to give you full peace of mind. We’ll explain all the legal requirements, so you stay compliant throughout the entire process.

We can also manage your redundancy situation on your behalf including conducting consultation meetings. Our HR consultancy page details this further.

If you need redundancy advice or support, or you have another HR matter you would like to discuss, please get in touch.

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