Redundancy: My top tips for employers

This year has seen changes to redundancy terms for employers, with the government halving the time a company needs to consult with staff before making large-scale redundancies.

The change is part of the UK Government’s wider review of employment law, which has already seen the doubling of the number of years an employee needs to work at a company before being able to make an unfair dismissal claim.

As of this year, businesses considering laying off 100 or more staff have to undertake a minimum consultancy period of 45 days, during which time they are expected to talk to staff and unions before deciding how many and which jobs will be lost. Under the old rules on collective redundancy, the minimum period was 90 days.

Firms that want to make between 20 and 100 posts redundant will have to consult with staff for a minimum of 30 days, as previously.

The new rules, which do not apply in Northern Ireland, exclude fixed-term contracts, which means anyone who has an end date written into their contract will not need to be consulted about what happens to them afterwards. Employers will, however, have to consult fixed-term staff if they want to make their positions redundant early.

So how can firms protect themselves in the context of the new employment law terms?

Is it a genuine redundancy?

Make sure that an authentic redundancy situation exists. There are generally three types of redundancy situations such as closure of business as a whole; closure of a particular workplace where the employee was employed; or the reduction in the size of the workforce.

Employees cannot challenge whether the employer acted reasonably in identifying the redundancy situation. However, an Employment Tribunal can investigate whether the redundancy is genuine, i.e. the real reason for dismissal.

Explain the need for the restructure

While employees may not like what they hear, they will be more likely to accept it if they understand the reason.  If your firm is going through a tough time and needs to downsize, this is likely to be apparent to your team before any formal restructure is announced.  Inform employees what the restructuring will do for the firm – you must give hope to those who will remain.

Ensure that you follow your own redundancy procedures

If you have a company redundancy procedure, make sure you follow it.  If you don’t, you put your firm at risk of complaints of an unfair dismissal at an Employment Tribunal. By following the process, you will ensure that you provide your employees with the relevant information at the appropriate time.

Ensure selection criteria for redundancy is fair and objective

Devise a redundancy matrix to select who may be made redundant using selection criteria. Ensure that this is capable of being measured or you could be at risk of being considered discriminatory. Reflect the needs of the business when selecting who may be made redundant.

Selection criteria can include skills, experience and performance, but again, these must be quantified.  Sickness absence can be taken into consideration but be careful in case there may be a disability discrimination viewpoint on that.

Consult with staff from the outset

Once you have identified which employees are at risk of redundancy, they should be advised of this and told the length of the consultation period. This will vary depending on the proposed number of employees possibly being made redundant. Be sure to stay up-to-date as these periods are subject to change!

All employee consultation meetings should be face-to-face and feedback opportunities must be provided.

Look at suitable alternative employment

With each employee at risk of being made redundant, if possible, try and look for alternative employment elsewhere within the company. If you find a suitable opportunity and the employee refuses to accept it, they may lose the right to redundancy compensation.

Set up a dismissal meeting and provide the right to appeal

If compulsory redundancy cannot be avoided, you must organise a dismissal meeting and confirm in writing giving the right to be accompanied.  Confirm the decision to terminate employment during the meeting.

The termination letter should set out the terms of appeal to a more senior manager providing the right to be accompanied.

Nobody wants to enforce redundancies on their staff, but by following these steps, your business will put itself in a strong position should any legal action be taken.

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About Hugh Hitchcock

Hugh Hitchcock is a director at DJM Solicitors, a commercial law firm providing legal services to clients across the UK and Los Angeles, Hong Kong and Japan. His career spans 23 years spent in media and corporate law, and he specialises in dispute resolution. He previously spent six years at a leading media firm that acted for Elton John and The Beatles' record label Apple.