The COVID-19 pandemic is having a significant detrimental impact on many businesses’ finances. Unfortunately, many employers will have to consider cost saving measures which may mean putting some employees’ roles at risk of redundancy.
Here we briefly summarise some points to consider when making redundancies.
Establish whether there is a genuine redundancy situation: is the business, or a particular department/site closing? Is there a genuine decrease in need or work for certain employees?
Plan: How and when do you want the redundancies to happen? How many? Ensure a clear list of steps/actions as part of your plan. Think about the long term as well – redundancy is supposed to be a measure to get your organisation back on track, so you should have a plan for how you’ll proceed following your redundancies.
Consider the appropriate pool of employees if selection will be necessary and establish criterion for selection. Your criteria must be fair to your staff, be objective, and make sense according to your plan and how your business works. This can include relevant experience and skills, qualifications, job performance, and length of service.
Communicate: Talk to your staff. It’s important that they know about the situation in a reasonable amount of time. If fewer than 20 redundancies are being proposed then it will be necessary to follow a fair procedure in relation to each employee at risk of redundancy. Over 20 and you will need to carry out a collective consultation process.
An initial announcement regarding potential redundancies will be needed to anyone who may be affected, with any individuals also being entitled to one on one consultation meetings.
Propose alternative measures. It’s important to ensure and show that you have explored any alternative cost saving measures before redundancy, such as pausing recruitment, reducing overtime, offering part time working or voluntary redundancies, for example.
Discuss: Any meetings should be used as a genuine open discussion with employees, who may come up with alternatives to redundancy which have not already been considered, and/or present ideas as to why they should not be made redundant.
Don’t forget about any employees who are pregnant or on any form of maternity, parental or sick leave as special rules will apply in these circumstances with redundancy.
Be sure to confirm any information given during meetings and any decisions in writing to affected employees.
Prepare for appeals. If you have followed the correct legal advice you will have minimised the risk of a tribunal claim. However, a fair redundancy process generally includes the right for an employee to appeal any dismissal decision.
Settlement Agreements: The handling of a redundancy process can be complex and timely, particularly for large scale redundancies so it is common practice for employers to offer an enhanced redundancy payment as an incentive to reach a settlement with any affected employees where in a financial position to do so as an alternative to compulsory redundancy.
Before entering into a settlement agreement, an employee must receive independent legal advice as to the terms and the effect of the agreement and on their ability to pursue any claims. It is customary for an employer to pay the employee’s legal costs for advice on the terms of the settlement agreement.
We have written extensively about settlement agreements and their importance in the redundancy process. In particular, you might find this blog useful.
This is our whistle-stop tour of areas that will need to be considered by employers when considering redundancies, purely as an overview. Following the full redundancy process and taking specialist advice throughout will help to ensure that you fulfil all of your legal requirements as an employer. Contact our specialist employment team for a no obligation and confidential discussion of your options; by phone on 0845 287 0939 or by email through our contact form.