2009 has already brought with it a surge in the number of employers making redundancies. Unfortunately this looks set to continue throughout the year. Much management and human resources time is likely to be spent managing, and dealing with the legal requirements for, redundancies. In the current economic climate, in which employees are less likely to walk into new employment and are more likely to bring claims, it is important to get the redundancies right.
To minimise the risk of claims for unfair dismissal, or unlawful discrimination, employers must act fairly, including following a fair redundancy procedure. Fair procedure involves: fair selection of employees for redundancy from the correct pool of employees; consultation with employees (including collective consultation where there are more than 20 redundancies during a 90-day period); and consideration of alternative employment. In addition, employers must comply with the statutory minimum dismissal procedure, including giving certain information to employees in writing and giving the right to appeal. (The statutory dismissal procedure will, however, soon be repealed and will not apply to redundancies after 6 April.)
Employers who follow the legal requirements for redundancy will ease the process for employees. They should also consider other actions that may assist employees. Redundant employees who feel they have been treated fairly and sensitively are much less likely to bring claims. This article does not set out the detail of a fair procedure (and does not deal with any collective redundancy issues). Rather, it provides some useful tips, covering both legal and practical issues, on handling redundancies.
1. Consider ways of avoiding redundancies
There is a legal requirement, as part of consultation with employees, for employers to consider ways of avoiding redundancies. Currently, many employers are implementing alternatives such as recruitment freezes, retraining, pay freezes/cuts, reduced hours and removal of benefits.
There are good reasons for treating redundancies as the last resort. Redundancies can be an expensive option for employers as well as employees. In addition to redundancy payments, there are the less obvious costs relating to management time, legal advice and decreased productivity during the redundancy period. Further, when business eventually picks up, employers face recruitment and training costs. Even in difficult economic conditions, employers will, wherever possible, want to retain talent and invest in key workers.
2. Request volunteers for redundancy
Employers are not obliged to request volunteers for redundancy but to do so is an effective way of minimising the need for compulsory redundancies. Compulsory redundancies may also be more palatable to employees if they know there was first a request for volunteers.
Where employers do request volunteers, they will still want to keep control of the redundancy process and ensure they do not lose key staff. It is therefore advisable to reserve the right to reject applications for voluntary redundancy.
3. Plan selection criteria carefully
To ensure fairness, selection criteria should be objective (as opposed to merely reflecting someone’s personal opinion) and should be capable of being verified, e.g. against attendance, performance and other personnel records. However, to ensure the success of the business going forward, an employer will also want to ensure the criteria are relevant to the available remaining roles.
4. Ensure good communications and consultation
Consultation (covering business reasons for the redundancy, selection issues, ways of avoiding redundancy, alternative employment and any other concerns of employees) is key to the redundancy process. Employers should therefore consider training and guidelines for those managers running consultation meetings.
Communications are generally important during the redundancy process, when employees tend to feel anxious and uncertain. It is important to keep communications open and to anticipate and respond to employees’ questions and comments. Depending on the scale of the organisation, an employer may identify a particular person to whom queries may be addressed. Another option would be a question and answer forum, possibly via the employer’s Intranet.
5. Remember to include employees who are absent from the office
Employers should ensure that employees who are absent from the office, including on long-term sick leave and maternity leave, receive all relevant communications and are included in consultation discussions. Even where an employee is unable to attend the office for meetings, consultation may still be possible by telephone or by attending the employee’s home.
Employers also need to remember that employees on maternity leave have an automatic right to be offered suitable alternative work where available (see below).
6. Consider alternative employment for employees
There is a legal obligation to consider alternative employment for potentially redundant employees. This continues even after the redundancy is confirmed, during any notice period.
The obligation to consider alternative employment includes positions in any group company, and so employers should be aware of the employment situation groupwide. Employers should not make assumptions about the kind of alternative role that would be acceptable. The safest approach is to offer any vacancy that is within the employee’s capabilities, even if it is with lower status and/or remuneration.
7. Assist with job hunting
Whilst this goes beyond any legal obligation, employers with useful industry contacts could pass these on to redundant employees. In some instances, they may even be able to provide employees with details of vacancies for which they may be suitable.
Many employers offer outplacement assistance in finding another job (e.g. help with CVs, job applications, interviews etc). This may be provided by an employer’s HR function or by an external company engaged, or paid for, by the employer.
Employers often allow employees paid time off to attend interviews or to otherwise pursue their job search. Indeed, those employees with at least two years’ service who are under notice of redundancy are legally entitled to a reasonable amount of paid time off to seek alternative employment or arrange training for future employment.
8. Consider other support for employees
Employers should consider any other actions that may alleviate the stress of the redundancies. They could think about the role of any employee counselling/assistance programme during the redundancy process. In any event, employers should be sensitive to employees’ needs and reactions. This may include giving employees time off after notification of potential redundancy or even allowing them to stay at home during the consultation period. It is also worth asking colleagues who are not at risk of redundancy to be sensitive to the situation of those who are.
9. Remember the paperwork
It is important to keep complete, accurate and professional records of the redundancy process. Employers must remember that all documents (whether written or typed, notes or a formal letter, and including emails and notes of meetings) are potentially disclosable in litigation. They may also have to be disclosed under data protection laws, in response to a data subject access request.
10. Consider enhanced redundancy payments/ Compromise Agreements
Enhanced redundancy payments exceeding statutory or contractual payments should help mitigate the effect of the redundancy. Where an employer is making an enhanced payment, it is sensible for it to be conditional on the employee signing up to a Compromise Agreement waiving any claims. The employer will, however, have to balance this against the requirement for the employee to take independent legal advice on the redundancy. Without this, the Compromise Agreement will not be legally binding.