Redundancies: importance of proper process

While figures from the Office of National Statistics have shown a drop in Scottish unemployment for a third consecutive month, this will bring little comfort to employers under continuing pressure to make redundancies during the current recession. Reducing headcount is a stressful process for both employees and management and consideration should be given to a few key areas before any redundancies are carried out:

1Are the dismissals by reason of redundancy as defined in employment legislation? Employers should be careful not to confuse a redundancy situation with non-organisational dismissals (such as those linked to an employee’s capability) – put simply, are less people required generally, as opposed to this person in particular?

2Are there ways to lessen the impact of the redundancies? Employers should consider alternatives to redundancies, such as redeployment; lay-off; restrictions on recruitment, salary increases and overtime. Any variation to contractual terms and conditions will need to be negotiated with the workforce, but employees may be more likely to accept detrimental changes when redundancy is the alternative.

3Are there any relevant internal policies in existence? Employers should be mindful not only of written documents, but of unwritten practices which have been applied previously to redundancy situations. In every case, meaningful consultation with the employee(s) affected is key.

4Which employees should form the redundancy pools, and what selection criteria should be applied? In other words, which employees will be selected for redundancy. This must be done using objective, fair and measurable selection criteria. Note that in some circumstances a pool can consist of just one employee.

5What is the scale of the planned redundancies? If 20 or more dismissals are proposed at the same establishment within 90 days or less, the employer will need to comply with the additional requirements of the collective redundancy regime. Firstly, the employer must notify the Department of Business, Innovation and Skills of the proposed redundancies; then the employer must consult with the employees’ trade union or other elected representatives about the proposals. Both obligations must be carried out within deadlines set by statute. If applicable, this stage must not be missed as the penalties are considerable

6Is there any “suitable alternative” employment for the redundant employee(s)? Employers should consider, and be seen to consider in consultation, whether the employees selected for redundancy could be offered alternative employment to save their employment. If there are alternatives, make sure employees know of them and can apply.

7What termination arrangements will apply? Dismissed employees will be entitled to some or all of notice pay, statutory redundancy pay and enhanced redundancy pay. Employees under notice also have a limited right to time off to seek new work or arrangements for retraining.

A transparent and well-communicated process is vital to prevent disruption and maintain engagement from those employees who will stay on. The whole process should be applied fairly and consistently making sure, for example, not to discriminate against employees on the grounds of a protected characteristic such as age or gender. Employers should go into the process with an open mind and be prepared to consider suggestions about how redundancies could be avoided. A full and fair process should mitigate the damage to workforce morale and the risk of successful employment claims against the employer.

For more information call Liam on 01224 622002.