With the UK in recession and the furlough scheme coming to an end on 31 October, redundancy is a hot topic of conversation right now. Organisations are monitoring costs meticulously and if demand isn’t there then naturally staffing levels, and their cost to the business, will come under scrutiny.
It’s important to remember that redundancy should be a last resort. Contrary to common belief, it won’t save your business money in the short term. It is time-consuming when you could be focusing on ways to increase your income and it can be disastrous for the morale of those employees who were not selected for redundancy.
We recognise that redundancy may be unavoidable if part of your business has closed or a particular type of work is no longer required, or maybe you need to close a branch of your business and don’t need anyone in that area.
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Once you have done the sums and decided redundancy is the only way forward, there is a process to follow to protect your liability and avoid unfair dismissal claims.
Are you making staff redundant? Don’t make these mistakes.
1. Failing to consider alternatives to redundancy.
Employers must always show they tried to avoid redundancies. Therefore making redundancies without considering alternatives such as placing employees on furlough is not a good idea. Asking for volunteers for redundancy can be helpful, however seeking volunteers requires careful planning to ensure you do not inadvertently lose key personnel.
If you are faced with making a number of people redundant, specialist HR advice is required to ensure you follow the process. Consideration of alternatives, meaningful individual and collective consultation, selection pools and scoring, appeals, redundancy and notice period payments plus counselling and support are all important and specialist advice will help you steer your business through this complex process.
2. Using subjective criteria for redundancy selection.
When selecting for redundancy it is important to ensure you use objective criteria such as performance, skills and qualifications, work experience or attendance or disciplinary records. Selecting people based on their time on the business or 'last in, first out' is risky as it may provoke discrimination claims and is unlikely to help you keep the people that will power the business recovery.
Remember it is automatically unfair to make people redundant based on trade union membership, hours worked e.g. part-time or for any pregnancy- or maternity-related reasons. Also, making someone redundant because of their age, sex, sexual orientation, marital status, disability, race or religion is unlawful. Women who are made redundant while on maternity leave have the legal right to be offered a suitable alternative role in advance of their colleagues.
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3. Failing to offer suitable alternative work to those being made redundant.
You must consider offering suitable alternative work to redundant employees. If you have any vacancies, these must be offered to employees who can have a four-week trial period in a new role without losing their redundancy pay should it not work out. In addition, employees who have at least two years’ service must be given paid time off to look for work during the final notice period.
Costs include statutory redundancy pay (this can be calculated on the GOV website), notice and holiday pay. Redundancy pay must be calculated based on pre-furlough wages. Also, you can't use the money from furlough to subsidise redundancy packages.
4. Forgetting to look after those which remain employed.
Your priority will be safeguarding the jobs of all of your employees and protecting your business. However, you need to juggle this with care of employees who are losing their jobs. Remember, your ongoing success is largely dependent on the morale of those who are still at work.
A workforce that is anxious about job security and concerned about their colleagues' redundancies is not likely to feel committed and engaged. Therefore you need to ensure that all managers understand that the focus should be on re-engaging the survivors. Telling people they should be grateful to have a job does not cut it.
In order to secure long-term commitment from employees, explain the situation as clearly as possible to everyone and ensure the redundancy procedure being used is well understood. Help people to understand the need for the changes and be as open as possible. Keep the communication going, in this situation you cannot over-communicate. Employees want to know what is going on and have the opportunity to discuss their concerns.
5. Failing to invest in the skills required.
Your leadership skills are key at this difficult time for your business. Help managers to develop the skills to reassure employees and cope with managing people during a period of change. Speak individually to key people in the business to ensure you understand their concerns and reassure them about their employment prospects. Overall, maintain a positive attitude for the future and show everyone the value of their role in that future.
You don't have to walk this path alone - our team are here to help.
As experienced HR consultants we have assisted employers to manage redundancy processes across many years. We're understanding of this being a stressful and highly emotive time for all, but we also know that mistakes cannot (and should not) be made along the way. Mistakes are not only unfair and upsetting but for the employer they can be extremely costly. Not just in terms of potential legal action, but the damage in reputation and respect from remaining employees and the wider business community.
We have created a specific package of support to assist those employers which have to reduce staff numbers through redundancy. Our Redundancy Support Package is just £395 +VAT and all resources can be accessed immediately. Find out more here.
If you have any doubts, questions or concerns at this time speak to our team today. Call 01722 325833 or email email@example.com. All conversations will be held in the strictest confidence.
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