Nobody likes thinking about redundancies. The reality,
however, is that many employers across the UK will have to cut
staff to ensure they survive the current economic
downturn.
This article provides a basic outline of the redundancy
process – and provides a few practical tips and
pointers. We will not look at the additional procedures you
need to follow if you are making 20 or more redundancies
– we will deal with that issue in a later article. Is
there a redundancy situation? When considering redundancies,
the first thing you should do is determine whether a redundancy
situation actually exists or will exist. If you make someone
redundant (or you think you have) but the Tribunal find that
there wasn't in fact a redundancy situation, the
dismissal could be unfair. Also, even if the Tribunal find that
there was a redundancy situation they could still go on to find
that the real reason for dismissal is something else e.g. poor
performance. Again, the dismissal could be unfair. It is very
important, therefore, to consider:
1. Is this a redundancy situation?
2. Will redundancy be accepted as the reason for dismissal?
Redundancy policy? The next step will be to establish whether
there is any form of redundancy policy, and whether it is
binding. If there is and it is – it might tie your
hands as regards selection criteria etc. Redundancy policies
are a bad idea - if you don't have one, don't
introduce one. Are there any alternatives to redundancy?
Consider whether there might be any alternatives to making
compulsory redundancies. Common alternatives include:
- Restricting recruitment
- Reducing or stopping overtime
- Trying to agree reductions in hours or pay (not likely). What about voluntary redundancy?
Do you need to invite volunteers for redundancy before you
start the process? Unless you are bound by a redundancy policy
– No. Very often, inviting volunteers is a bad idea.
You tend to get volunteers who you do not want to lose. You can
turn down volunteers – provided your invitation for
volunteers is properly worded. But, if you turn down volunteers
in a department and then go on to select other employees in
that department, they can argue that the selection process is
inherently unfair since you were never going to select the
volunteers because you had previously rejected their
applications for voluntary redundancy. In addition, it delays
the whole process. In redundancy situations delay is dangerous.
The longer the process goes on without everyone knowing who is
in the frame and who isn't, the more scope there is for
employees not in the frame to become unsettled and start
looking for other jobs. What if someone volunteers to go once
the process has started? You would probably let them go (if it
will reduce the number of compulsory redundancies) but, if it
is someone you do not want to lose, you might be able
(discreetly) to persuade them to stay. It is easier to manage
individual volunteers at this point than if you make a general
request for volunteers before the process starts. The pool The
next step is to decide the pool of employees from which you
will select those employees to be made redundant. In other
words, those employees who work in particular departments or
who are doing particular jobs – and from which the
redundancies have to be made. Even if you have, say, 3 people
in a department and you want to make those 3 jobs redundant it
does not necessarily follow that those 3 people should be the
people selected for redundancy. There might be other employees
doing similar jobs, or with similar skills, in other
departments, who should be included in the pool. But - it is
possible to keep people out of a pool – e.g. if they
have key skills you cannot afford to lose, or connections with
key customers or they are a settled team and you do not want to
break it up. Sometimes, you will not need a pool at all if the
person you are making redundant is in a unique position and
there is no real interchangeability of duties or skills with
other staff. Selection criteria Once you have your pool
– or pools – organised, you then need to
work out what selection criteria you want to use.
Common selection criteria include:
- Key skills and experience for the remaining jobs
- Attendance
- Disciplinary record In the absence of evidence that you
have chosen the selection criteria to "fix" the
result (God forbid), Tribunals normally accept your choice of
criteria – unless they are obviously unfair. But,
when choosing selection criteria and doing the scoring, be
careful.
Two examples.
1) Discrimination – ensure your selection criteria
do not breach any of the discrimination legislation.
Don't directly select for any discriminatory reason and
think about any indirectly discriminatory effects.
2) Pregnancy and Maternity – You risk claims for sex
discrimination and automatic unfair dismissal if you select a
woman who is pregnant or on maternity leave. In addition, and
bizarrely, if you make redundant a woman on maternity leave you
are obliged to give her first refusal on any available suitable
alternative employment.
For these reasons – and however unfair it may be -
many employers try to leave women who are pregnant or on
maternity leave out of the pool for selection. Applying the
selection criteria – doing the scoring. The next step
is to do the marking. Think carefully about who should do the
marking – normally 2 or more managers. Carry out a
mock scoring exercise – if you get the
"wrong" result – think again about your
selection criteria.
Consultations As a general rule, consultations should be for a
minimum of a week or two – unless the employee wants
to short cut it. Do not set down a rigid time frame. Contrary
to popular belief there is no need to consult with everyone in
the pool, just those selected. Consultations should start with
a brief meeting with the employees provisionally selected to
provide them with an initial letter. In the initial letter
explain how the provisional decision has been arrived at and,
if there is a pool, enclose a copy of their score sheet.
If you wish, this letter could include details of an enhanced
redundancy payment in the event that he is made redundant, in
addition to his basic entitlements – provided he
signs up to a compromise agreement. This is a very good way of
short cutting the process and avoiding claims. Most employees
accept the offer at an early stage, provided it is
reasonable.
Alternative Employment
You are obliged to look for and offer any available vacancies
within their skills and capabilities.
You should offer a job of lesser status and/or pay and any
jobs at other sites or with associated companies.
Trial periods Where you offer suitable alternative employment
and the employee accepts he has a four-week statutory trial
period in that new job.
Termination Consultations will end with the employee either
signing a Compromise Agreement or being dismissed (with the
right to an appeal) with or without an offer of alternative
employment.
Even if the employee accepts an alternative job with you he
can still bring a claim of unfair dismissal arising from the
termination of his previous job.
And finally....... The key to successful redundancy exercises
(in terms of avoiding/defeating claims and maintaining morale)
is planning. Make sure that the whole process is choreographed
before you speak to the first employee. Involve your lawyers at
an early stage – believe it or not that will actually
save you money in the long run.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.