Despite the UK economy enjoying a more buoyant economy over the last few years as we have clawed our way out of a global recession, it is the harsh reality of everyday business life that there are still times when we require a significant tightening of the purse strings and have to resort to making staff members redundant. Market fluctuations, closing a factory or simply advances in technology can all lead to a need to reduce the size of the workforce. It is likely that most companies will have had to face the task of having that difficult conversation with its employees at some point in its recent history, and just as likely that they will have to again at some point in the future. In just the last 12 months alone, over 950,000 people have been made redundant in the UK.
From an employer’s position there is no doubt that making those tough decisions can keep you awake at night. And whilst it’s a business decision that comes from the top of the organisation, it is more often than not up to the HR department to direct the process and deliver the bad news. At such a devastating time for employees, employers need to ensure they are managing the consultation process to minimise the risks to their business as well as ensuring that employees are treated fairly.
Is it a genuine redundancy?
A redundancy is a dismissal and, like any other dismissal, it can be fair or unfair. For a redundancy dismissal to be fair there has to be a genuine redundancy situation and a fair procedure has to be followed. A genuine redundancy occurs when the job an individual was recruited to do no longer exists, or an employer intends to cease work in a particular location or there is a need to reduce the headcount. The specific circumstances of the situation dictate which specific procedure has to be followed. For fewer than 20 employees, the obligation is to consult with the employees individually. Where 20 or more employees are to be affected within a 90 day period, a collective consultation must take place, with an elected employee representative. The length of the consultation process depends on the expected number of redundancies. Failure to undertake the correct consultation process and to notify the Secretary of State can lead to criminal prosecution. Indeed a number of directors have been in the headlines in recent years for breaches of these requirements.
Getting it right
Once you’ve got the legal responsibilities sorted, it’s then time to look at the more “touchy feely” aspects of dealing with redundancy. What is the best way to go about it without destroying your employee’s confidence and at the same time trying to minimise the impact on your company’s brand? It of course depends on the individual circumstances of the employer and employee, but a few simple guidelines can set you off on the right foot.
- Ensure that you follow the correct redundancy procedure and be consistent in your approach.
- Communicate well with your employees – not just to let them know the formal arrangements of the process, but to reduce anxieties and reduce the negative impact on the business.
- Consider your selection criteria very carefully, ideally with data/statistics to back up your decision. Using objective, and not subjective, criteria will to stand up to scrutiny in a tribunal should it come to it.
- Offer opportunities (where they exist) to retrain into another area of the business. It may not be the solution for everyone, but it comes across as a sign of good will.
- Offer outplacement support to those who are on the move. An external provider can offer practical support and career guidance to help the transition go more smoothly.
- Use redundancy as an excuse just for getting rid of an employee you are not fond of. It is the job role that is to be made redundant, not an individual.
- Rush into the redundancy process without considering other options such as retraining or changing working patterns.
- Treat your people as disposable assets – it may leave a sour taste in their mouth.
- Be in a hurry to save money and make people redundant before completing the full consultation process – it could cost you more in the long run.
Although some redundant employees will inevitably challenge your decision, feeling they have nothing to lose, dealing with your staff honestly and professionally does a lot for good will. Commit to giving them a good reference, help them find potential new positions, give them time for working on their CVs, job searching and interviews if they are still in your employment and put in a good word for them here and there if you can.
Redundancy can be a long and difficult process for employers, but at Park City we can take the burden away from you. From the start of the consultation process, right through to outplacement services we are experts at handling such situations in a professional, yet sensitive way, helping your business to protect its employer brand at such a crucial time.