No business owner wants to make their staff redundant, however at times it’s necessary in order to protect the company. The process is obviously very difficult for the employees involved but it can also take its toll on managers. This is particularly true as redundancies often involve staff who have been working for the company for many years.
Once a business has decided to make redundancies, a specific procedure must be followed. The process can be complicated and it can be easy to make mistakes, however this can leave you open to criticism and potential legal action.
Avoid
Before even beginning to think about redundancies, companies should try to exhaust all other options. In some cases, there are changes that can be made in order to avoid letting people go. The way to go about this will vary from business to business but common solutions include, reducing hours, changing hours, limiting or completely stopping overtime and terminating temporary contracts. You may also consider moving the staff members in question to a different section of the business.
There are ways to avoid or at least postpone redundancy but sometimes it’s the only option left.
Redundancy vs. Termination
One of the more contentious elements of redundancy is the decision-making process. The whole idea behind redundancy is that a role has become redundant and is no longer needed, either because the company has changed, moved location or downsized. However, businesses need to be completely clear that this is different to a termination, which implies that the employee has done something wrong. If a staff member thinks that their redundancy is a firing in disguise, they can sue the company, which is obviously far from ideal.
Discrimination
When choosing which employees to make redundant, it’s extremely important to avoid any sort of bias, otherwise you could be accused of discrimination. The decision on who to let go should be based on the viability of their role within the company. Suffice to say, personal characteristics such as sex, race, sexuality or religion should not play a part in your decision. You also can’t base the decision on those who have or are likely to take maternity leave. Any sort of potential for an accusation of discrimination, could lead to legal challenges.
Compulsory vs. Voluntary
Up to now, we have talked about compulsory redundancy but there is another option- voluntary redundancy. This is where a company informs their employees that they need to make redundancies and gives them the option to volunteer. For some workers, this is an attractive prospect, especially if they’re looking to move on or want to take early retirement. Assuming there are employees who wish to take the offer of redundancy, this becomes an ideal situation as the business can make necessary changes, without forcing anyone out.
The Process
As we have established, making redundancies isn’t easy, for the staff or for the person making the decisions. Therefore, the process needs to be open and transparent, with different procedures to follow. For example, when deciding on which employees to make redundant, businesses need to have a consultation. This is an opportunity to inform the relevant staff of the situation, including details such as the reasons for redundancy, how many employees are involved, how the process will happen etc.
The consultation can change according to circumstances. If you’re making more than 20 employees redundant, then you need to have a collective consultation with an individual representing the group. You also need to make considerations for the workers themselves and how this could affect them personally.
Companies also need to send an “at-risk” of redundancy letter to those employees who will be affected. Again, this should include all the relevant information and details on the process.
Once the decision is made, managers should talk to the affected parties directly. This may be coming as bad news, so managers should be respectful but also frank, ensuring the staff know everything they need to.
The overall process of redundancy can be complex, with many factors to consider. Alongside the decision process and communications with staff, businesses also need to consider redundancy payments, which differ according to the employee. Notice is another issue which changes according to the worker and their specific circumstances.
Fortunately, for those who are looking for expert help with this process, Salhan Accountants are available. Their HR Consultancy Service offers a comprehensive, informed solution. Ensuring that the often-maligned redundancy process is completed fairly and without fault.
