Redundancies: 3 Expert Tips for Employers

With many businesses feeling the pressure from rising costs and other difficult economic conditions, we are seeing some reviewing their staffing needs as a way to steady the ship.

It’s important that any redundancies are made in compliance with the employee’s legal rights to minimise the risk of potentially costly and time-consuming claims.  In most cases, the key legal protection is going to be unfair dismissal, which is enjoyed by all employees who have at least two years’ continuous service with their employer.  This means that the employer has to follow a fair process and ensure that they have a fair reason – such as redundancy – before dismissing.

In practice, it doesn’t usually have to be a lengthy or difficult process.  For small scale redundancies, the role is placed at risk and the person notified.  There then follows a period of consultation whilst the proposal is discussed and alternatives considered, after which the employer decides to dismiss the employee or proceed with an alternative which avoids the need for it.

An additional level of complexity is added if there are 20 or more to be made redundant.  Care also needs to be taken if there is more than one person carrying out a particular role, as it usually means that employees need to be “pooled” together and then the employer uses fair criteria to decide who stays and who goes.

Apart from those basics, here are three pro-tips for any employer thinking about redundancies.

1. Keep an open mind and don’t fix the outcome at the start.

A central tenet of a fair consultation process is that it must be meaningful and therefore not predetermined.  Nevertheless, it’s natural and relatively common for a senior manager to say what they want to happen, in particular who they want to keep and who they want to make redundant.  This can sometimes be very problematic.

Take for example the (real-life) example of a manager who sketched out on a piece of paper how she wanted her team to look after the upcoming restructure.  She left the paper on her office desk and one of her reports walked in, saw the plan and noted that he was not a feature of the post-restructure team.  He took a photo of the sketch and then was in a very strong position to say that the upcoming and supposedly open-minded consultation process had already been decided and was therefore unfair.

Whilst that’s an unusual set of facts, it’s important to remember that employees could be entitled to request all internal correspondence and memos which relate to them under data protection law.

The answer is to involve your HR team or employment lawyers from a very early stage and plan the process in full, even though it’s tempting to rush to record your preferred outcome.

2. Roles are redundant, not people. 

Sometimes a manager will say something like “Joe isn’t performing and he keeps coming in late, I would like to make him redundant”.  The problem is that this conflates three different potentially fair reasons for dismissal – performance, conduct and redundancy – and the right process to follow varies in each case.

There is a statutory definition of redundancy can be summarised as the cessation or diminishment of work of a particular kind.  For example, if you are planning to close the part of your factory that manufactures lawnmowers, you will no longer have any need for the roles which make the machines and so those role (and the people carrying them out) are placed at risk of redundancy.  It’s a business decision which affects certain roles, rather than something personal to anyone or linked to their performance or conduct.

3. Is there a shortcut?

Although most progress relatively smoothly, redundancies can be time-consuming, disruptive and damaging to staff morale.

Accordingly, some employers choose to shortcut matters by offering enhanced redundancy packages in return for employees leaving by agreement.  There can be numerous benefits (and sometimes some disadvantages) which are discussed in our guide for employers here.  If this option is used effectively it can mean both parties move on amicably and with minimum disruption for the business.

Another way forward might be to dismiss those who have under two years’ service and so do not have the protection against unfair dismissal.  However, this is something to discuss with your advisors first as it will still come with the risk of discrimination or whistleblowing claims, for which there is no qualifying period of service.