Redundancy – The moral and legal obligations you must be aware of.Oct 21, 2020
We understand that you have worked hard to build up your business, to grow, to expand and to service your customers in the best possible way. The thought of making members of your team redundant is probably not one that you have entertained until recent months. We certainly agree that redundancy is an option that should be seen as a last resort for organisations. However, the economic difficulties being experienced due to the pandemic are unfortunately resulting in the discussion of redundancies being all the more common.
With the Government Furlough Scheme highly likely to end at some point in 2021, large-scale job losses unfortunately loom large in many hard-hit sectors. As HR professionals we believe we have a responsibility to highlight that whilst redundancy should always be seen as a last resort, it may also be a necessary step in saving organisations. Through reorganising staffing structures it is likely that these organisations will be more likely to survive, to once again thrive, and once again employ teams of people in the future.
Redundancy processes can be an emotional time for all involved, a time that is often made harder by your desire to do what is morally right by your employees. We believe that it is morally right to treat your employees respectfully and fairly, as well as offering them support throughout any redundancy processes that they are a part of. Ensuring employees are treated fairly and in accordance with the law will also go a long way towards protecting your organisation too. This insight aims to support you by advancing your understanding of what is involved with redundancy, as well as demonstrating that support is accessible for you should you require it.
Before we dive deeper into the best practices of redundancy, it is important to be aware of the pitfalls which many businesses may fall into.
- Worryingly, one in four managers are unaware of the law around consulting staff before making redundancies, according to a resent ACAS study.
- Another neglected area is the absence of a strong business case, where a genuine need for redundancy is not clearly shown.
- Further, there is also often confusion over selection pools and what constitutes a fair scoring criteria.
Making such errors does sometimes go without consequence, but there is no doubt that this puts your organisation at risk and it can certainly consume large amounts of time to defend your position.
It is clear that there is no ‘one size fits all’ solution to this worldwide problem. How you and your businesses navigate through this crisis is ultimately up to you. Whilst many options do still exist, many come accompanied by legal processes that you would be well advised to follow. The following diagram shows the procedures that should be followed and the order that they must be completed in to remain legally compliant:
The Law & Documentation
Pandemic or no pandemic, the law remains unchanged and any employees ‘at risk’ of redundancy must be involved in a consultation process. In environments that are not COVID secure, or for employees who are not comfortable meeting in a face-to-face situation, alternative arrangements must be made. More options are now plausible thanks to recent technological advances in video conferencing software as an example. Regardless of how you achieve a suitable consultation there are still processes and procedures to follow. Following your organisation’s redundancy policy and fulfilling employee contracts remain key to you conducting a successful process. The process should be documented and evidenced throughout, using meeting notes and written correspondence between the employer and employee. Employees have a legal right to be accompanied by a colleague or Trade Union representative, especially at the meeting where the final decision will be communicated. Employees also have the right to appeal the final decision and should receive confirmation on how to action this.
Alternatives to Redundancies
Some clients we have worked with recently told us that they had considered all viable alternative options. However, they were not aware of the options surrounding changing contractual obligations with the agreement of their employees, or measures such as offering any willing staff members the option of a short-term layoff. These examples, as well as other similar ones, may be welcomed by your employees and may support your business during the coming months. Importantly, you as the employer have a duty to look at and offer suitable alternatives in a bid to avoid redundancy if at all possible. Care however must be taken in such scenarios not to breach employee contracts. As such, a careful and informed approach is advised.
You must have a valid business case for making redundancies. You will need to demonstrate well-founded evidence of the genuine need for redundancies. Planning should also detail the potential number of redundancies and the cost implications of this. If redundancies involve more than 20 employees, you as the employer must inform the Redundancy Payment Services who act on behalf of the Department for Business, Energy & Industrial Strategy (BEIS).
At Bespoke HR Solutions we recommend the consultation period should generally be no shorter than two weeks where fewer than 20 employees are involved. During this consultation period the employer should seek to avoid the redundancies, reduce the number of redundancies (including voluntary ones) and mitigate the effects of the redundancy situation. Employers will need to consider the possibilities of alternative jobs, periods of temporary layoff, or changes to other terms and conditions where they have the agreement of the employee.
The consultation period (collective or individual) will consist of a number of meetings with the employees and the process of debate on the proposals will continue until either the employer has answered all the suggestions/proposals by each employee or business reasons dictate an end to this process. The employer is legally obliged to give the following information:
- The reason for the redundancy dismissals.
- The number of proposed redundancies and their job types.
- The total number of employees affected.
- The proposed methods of selection.
- The procedure to be followed in dealing with the redundancies.
- The method of calculating redundancy payment.
If you are proposing 20 or more employee redundancies you must consult a recognised trade union or employee representative, separate timelines and conditions will apply so please ensure you consult with your HR representative.
It is important for you that you choose a selected criterion that will enable you to retain the workforce with the skills that you organisation needs in order to succeed in the future. However, it is important to operate a fair selection process as employees could pursue a claim for unfair dismissal on the grounds of unfair selection for redundancy. An example of when you might need to carry out a selection exercise is when there is more than one employee in the same job role, in interchangeable jobs or in broadly similar job roles.
Employment tribunals look favourably on selection procedures based on a points system, which scores each employee against relevant criteria. Examples could include criteria such as; length of service, work experience, attendance, disciplinary records and conduct, skills, competencies and qualifications, as well as performance records and appraisals.
Employers must take great care in choosing and applying the criteria to avoid discrimination. For example, selecting part-timers could be discriminatory if a high proportion of women are affected.
Scoring should, if possible, be carried out independently by at least two managers who know all employees in the selection pool. Marks from the two assessors should be added together to give a total score for each employee.
Redundancy rounds will affect two main groups. Those employees who have been made redundant and those who “survive”. Communicating clearly with both groups will help ease fears and reduce workplace gossip. Providing training for managers can help them to reconnect with their teams through re-establishing trust and therefore maintaining engagement. Carrying out organisational health assessments can help minimise the risk of your remaining staff taking sick leave as this proactive approach can help you to address any concerns before they escalate. Finally to support those being made redundant organisations often consider outplacement support. Outplacement services are geared towards supporting those who are made redundant by helping them to explore any practical steps that they can take to increase their desirability in the job market.
All too often organisations approach us after already causing damage during this process. Opening conversations with us largely begin with “We think we forgot to…”, “It is possible we have overlooked…”, or most commonly, “We didn’t know that we had to…”. We are here to support you in managing the HR function of your organisation, allowing you to focus on other more important areas for your business right now. We welcome calls from our clients at any time, however we advise that sooner is often better.
Claire Bruce, HR Consultant
We can help you, contact us today for a no obligation consultation.