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Employment Law Top Five: Practical tips for employers handling redundancies

18/03/2021

When making redundancies, one of the main concerns for an employer is to avoid or protect itself against employment claims, most commonly that of unfair dismissal.

However, in addition to complying with legal requirements, a significant factor in whether employees bring claims (and their willingness to be reasonable about settling them) often comes down to the way they perceive they have been treated, irrespective of whether that treatment is fair in legal terms.

There are also the issues of maintaining the morale of those not selected for redundancy and limiting the wider reputational damage that can flow from a badly handled redundancy process.

Whether you are closing your entire business, closing a branch, or reducing staff numbers, the following five tips apply:

1. Take time to plan

It sounds obvious, but despite being a key stage in any redundancy process, it is surprising how often the planning process is overlooked. Many claims arising out of redundancies can be traced back to a lack of planning – both in terms of a lack of proper consideration of the issues involved in effecting a fair redundancy, and a lack of planning the process around those issues.

Admittedly, the Covid pandemic has meant that there are some situations where the impact of an event on a business is so sudden and catastrophic, that the time for planning is limited and immediate redundancies are necessary for survival.

However, this is not usually the case, and time spent planning, including careful consideration of things like the business case for redundancy and how that can best be presented to the employees; identification of the pool of employees from which redundancies are to be selected; the selection criteria; and how best to achieve proper consultation with employees, can avoid claims further down the line.

For example, an employer who can show that careful consideration was given to things such as identifying the pool of employees affected by redundancy and can identify the reasons to support this, will in most cases be deemed to have acted fairly.

2. Presentation is key

While news of a redundancy programme is rarely welcome, after getting over the initial shock employees generally appreciate honesty and are less likely to challenge things if they feel an employer is being transparent about the situation and is treating employees fairly and consistently. It will also mean that they are less likely to make adverse remarks about the employer, both to colleagues and to the wider world, particularly on social media.

It is, in any event, vital that redundancies are presented as a proposal and not a fait accompli, and that no final decisions are made until the employer has consulted with affected employees.

Employees who feel that their voice has been heard and views considered before any final decision has been taken are more likely to accept the outcome of the process, even if it still results in their redundancy.

3. Involve line management in the selection process

While the process itself might be handled or overseen by HR, it is important that line management are at least involved in the selection of employees for redundancy.

Line managers are the ones with knowledge of the employees and are best placed to score employees when it comes to criteria like competency and skills, and to respond to any challenges from employees about their scores. Where possible, at least two line managers should be involved in the scoring process to ensure consistency and guard against bias.

4. Don’t forget the rest of the workforce

Redundancy programmes are unsettling, not just for those in the pool from which redundancies are to be selected, but also for other employees who, particularly in the current climate, might feel anxious about job security.

In terms of your wider workforce, communication is vital. Informing them that the redundancy process is taking place and the reasons for it is important. Transparency with your workforce will not only be appreciated but mitigates the risks of rumours and misunderstandings, which can be difficult to manage.

Ultimately, while talk of redundancy is bound to have an unsettling effect, if employees get the impression that those at risk are being treated fairly, the less likely employee morale and loyalty amongst the wider workforce will be affected.

Those employees who are in the pool but, based on initial scoring, are not provisionally selected for redundancy, should be kept informed of the progress of the redundancy process. However, you as the employer should refrain from providing any indication that a position is safe until the entire process is complete and all those employees who are to be made redundant have been given notice of the termination of their employment and the period for any appeal has elapsed.

5. Create a paper trail

Every record of the redundancy process, from the minutes of the management meeting at which the business case for redundancy is determined, through to the scores of all employees and meeting notes of employee consultation meetings, is evidence that would potentially need to be disclosed to an employee in the event of them bringing a claim arising out of their redundancy.

It is therefore of critical importance that employers take this into consideration and ensure that all stages of the redundancy process are carefully documented to support the decisions taken and process followed to achieve a ‘fair’ redundancy. This should include evidence to support the reasoning behind the identification of the pool of employees at risk of redundancy, the selection criteria used and the alternatives to redundancy that have been considered.

 

This article should not be relied upon as a substitute for professional legal advice. If you are an employer seeking legal advice on a particular matter or employment circumstance, please contact Deborah West on 01202 294 566 or email [email protected].

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