Why make someone redundant? 

Redundancy primarily occurs when a business is either closing (perhaps to relocate) or when the employees needed for a specific role are no longer needed or being reduced.  Cutting down on the number of employees can save costs and reduce overheads for employers if there are any financial issues.  After all employees are often one of the biggest expenses a company has. Secondly, the company may need to be restructured if it has outgrown its original design – perhaps people need to be moved around (redeployment) or some roles are just not needed at all (redundancy).

How does the process work? 

Redundancy should only happen once you are certain that there are no other options.

Have you…

• Done a cost review?
• Investigated as to whether reducing hours or pay would work?
• Considered if any extras can be cut, such as bonuses or benefits?

If even after this, there appears no viable solution then you’ll need to read the steps below on how to fairly and correctly execute a redundancy process.

1. What are your reasons? 

It’s vital to know why you have come to the decision to make roles redundant so that this can be communicated to staff.

2. Which roles are being made redundant?

Once you decide which jobs are no longer needed you will have created a group of people at risk of redundancy. This could include multiple people if many of your employees do similar tasks, or even just one person if they have a unique, standalone position. If you have a number of people who do the same or similar roles, they will need to be put into a selection pool.

3. Tell the people who are at risk of redundancy 

Depending on the numbers involved, this can sometimes be done in a group meeting – here, you must consult those affected about their job either being no longer required or changed. This gives the affected employees a chance to propose any changes that may influence your decision.

4. Create selection criteria

If you need less of a particular role you will need to design selection criteria.  This is a set of criteria where you set out the skills and behaviours needed in the roles that will remain. You will score individuals against each of the criteria set.  This will offer objective reasoning behind the decision on who will be kept and who will be let go.

5. Individual consultation meetings 

You must now hold one-on-one meetings with those whose jobs are at risk of redundancy.  These meetings are extremely sensitive and can be very emotional and difficult for an employee to take in what is happening.  It is essential to give sufficient time for an affected employee to provide feedback on the selection criteria, how they feel about the decision and to discuss alternative roles if appropriate.  Ultimately, you will provide an outcome letter which addresses any points made by the employee in their meeting and invite them to their next consultation.

6. Second consultation meetings

This is your opportunity to let your employee know how they scored (if they want to know) and if they have any comments on the decision to select their role for redundancy.  Whilst they may want to know how everyone else scored in their selection pool, you cannot disclose this information.  This consultation meeting must be formally followed up in writing, again answering any feedback and points raised and inviting them to a final consultation meeting.

7. Are there alternatives? 

Check if your company has any role vacancies that may be a suitable match for those being made redundant – this means that the skills required are similar to their current position.  Provide as much information as you can about these roles to your at risk staff.  Give them the opportunity to apply if they wish.  Some roles may be deemed “suitable alternative employment” and some may not be deemed suitable alternatives, i.e. seen to be more junior, require a lot of additional training, have different shifts or hours.

8. Final consultation

At this stage you can give your staff a notice of redundancy.  As all points raised should have been thoroughly talked through at the earlier stages, you should only need to briefly recap the previous discussions and reasoning before issuing a notice of redundancy.  This must be confirmed in writing, including any leaving arrangements, the redundancy terms, payment schedules and the right to appeal.

9. Right to appeal

This is a necessity to show that this has been a fair process throughout.  If an appeal is raised, a manager uninvolved in the process should hear the appeal to ensure objectivity.

Submit an enquiry via our online form today to find out how we can help your business, or call 07771 642 182 to book a 30 minute consultation with Karen directly.

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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.

1. Do take ownership and responsibility for the decisions you make.
2. Do communicate clearly.
3. Do be objective with your selection criteria.
4. Do treat those selected with respect.
5. Do support your redundant staff as much as you can.

My top 5 DON’Ts

1. Don’t blame someone else for the decision to make redundancies.
2. Don’t keep information to yourself.
3. Don’t hide your selection criteria.
4. Don’t change your mind.
5. 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.

Some Business groups such as the Institute of Directors and the local Chamber of Commerce have Member helplines that provide help and advice on employment matters.

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.

Submit an enquiry via our online form today to find out how we can help your business, or call 07771 642 182 to book a 30 minute consultation with Karen directly.

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