Redundancy is a special form of dismissal where an employer needs to reduce the size of its workforce. In the UK an employee is dismissed for redundancy if the employer has ceased, or intends to cease, continuing the business, or the requirements for employees to perform work of a specific type, or to conduct it at the location in which they are employed, has ceased or diminished, or are expected to do so. If there’s a genuine redundancy, employers must follow a correct procedure and make redundancy and notice period payments. 1(extract from the CIPD factsheet Redundancy: an introduction, 29 Sept 2020).
Redundancy legislation is complex. As a small business owner, you must understand your obligations, your employee’s rights, and the correct procedures to follow. Failure to follow the correct procedure can result in a claim for Unfair Dismissal.
Making redundancies should be a last resort. Before deciding to make redundancies, you need to consider if you can avoid them.
- Furlough – can you utilise the new furlough scheme?
- Redeployment – could staff be retrained and carry out other duties.
- Flexible working – would staff consider job shares, or part time hours, or compressed hours.
- Reduced hours for a short period of time – staff may consider this as an alternative.
- Temporary layoff – do you have a clause in the employment contract that allows this?
- Limit or stopping overtime.
- Letting go of temporary or contract staff.
- Don’t hire any new staff.
When redundancy is the only option, Make A Plan. Remember that for an employee being made redundant it is an emotional and sensitive time.
Whether it’s a downturn in business, business model change, new machinery, new ways of working, restructure, or office move/closure, whatever the reason it’s a tough call to be made.
My top 5 DO’s.
- Do take ownership and responsibility for the decisions you make.
- Do communicate clearly.
- Do be objective with your selection criteria.
- Do treat those selected with respect.
- Do support your redundant staff as much as you can.
My top 5 DON’Ts
- Don’t blame someone else for the decision to make redundancies.
- Don’t keep information to yourself.
- Don’t hide your selection criteria.
- Don’t change your mind.
- Don’t forget the staff left behind.
Above all, Make A Plan.
Some things to include in the Plan; a written communication detailing the need and reason for redundancies; the budget showing the savings needed and the impact on costs; the number of staff affected; the selection pools (if appropriate); a budget (for notice periods and redundancy payments), scripts to use for the consultation meetings, a timeline for consultation, proposed termination dates, internal vacancy list (if applicable).
The Advisory, Conciliation and Arbitration Service (ACAS2) has a wealth of information, template documents and guidance available for employers to use.
If your business is facing redundancies make sure that you take advice. Redundancy is complex and can lead to claims for Unfair Dismissal. Unfair dismissal claims are costly, time consuming and bad for business.
If you don’t have access to a helpline or an inhouse HR expert, external HR Consultants are a great source of expertise. Experienced HR Consultants can work with the small business owner to produce the right Plan for their particular situation.
1CIPD – The Chartered Institute of Personnel and Development – The professional body for HR and people development.
2ACAS – gives employees and employers free, impartial advice on workplace rights, rules, and best practice.
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