During the COVID-19 crisis, a lot of businesses have had to temporarily close and have used the Government Job Retention Scheme to Furlough employees as an alternative to redundancy. As restrictions start to be lifted many businesses will be faced with difficult decisions to reduce costs, in line with reduced demand, including headcount costs and that inevitably means making redundancies.
Redundancy is sometimes a euphemism for a dismissal on performance or capability grounds but is strictly defined in law as where: There is a Business Closure, or A Workplace Closure, or There is a reduction [or anticipated reduction] in the need for employees due to decreased demand for product or services.
A Redundancy Plan will help manage each stage of the redundancy process including: Avoiding compulsory redundancies including seeking voluntary redundancies; Consulting staff; Selecting staff for redundancy; Giving staff notice; Working out individual redundancy pay & Supporting staff and planning for the future.
The plan should include: Development of a Redundancy Policy & Procedure that is consistent with individual Employment Contracts and Employee Handbook. Agreement of a consultation process; this might be group consultation or individual consultation or both. A process to determine the criteria to be used to determine who is “at risk” of redundancy and who will be made redundant.
Consultation Process is about seeking ways to mitigate compulsory redundancies: If there are likely to be 20 or more redundancies in a 90 Day Period, the employer must engage with the Trade Union or Staff Association. If there is no recognized body to represent employees, employees should elect representatives [1 per 50 employees]. There must be at least two meetings with individuals “at risk” of redundancy. Once decisions have been made individuals must be informed and the employer needs to give staff notice and work out and inform individuals of redundancy pay entitlement & Communicate the appeals process.
The Consultation process should include determining the redundancy selection criteria - multiple criteria should be used as a basis for selecting those at risk of redundancy and to ensure that scoring is as objective as possible. Could include: Standard of work, Attendance & Disciplinary records and Skills and experience.
Once criteria have been agreed you will need to score each employee and include written evidence to support your score. You also need determine an appeals process in case individuals feel they have been unfairly selected. [This will reduce likelihood of an employment tribunal claim being successful].
Decisions relating to those “at risk” of redundancy and redundancy decisions will need to be communicate sensitively – group and individual consultations should seek ways to mitigate compulsory redundancies such as voluntary redundancies, reduced working week, pay cuts, Secondments etc.
It is important to provide those facing redundancy with a level of support in order to reduce the damage to employer image and reputation. Outplacement services should include:
Please contact us if you have any questions about people management & development and see how we can help you.