Redundancies are never easy to deal with, but unfortunately they can be necessary. A shortage of work, or a role which is no longer required, can sadly lead to staff cutbacks in the workplace.
To ensure staff are treated fairly, and to reduce the risk of finding yourself caught up in a costly tribunal process, it’s important that you follow the appropriate steps when making any redundancies.
Determine your need for the redundancy
The first step is to really understand the need for making staff redundant. You may be asked to explain your thought process regarding this.
For instance, the coronavirus pandemic has resulted in a loss of profits for many businesses. Some employers are finding that they don’t have the funds to keep existing roles, or don’t have enough work to justify employing as many people.
What is important is that the reasons are legitimate ones. Employers can’t make someone redundant just because they no longer want that particular person. If that’s the case, there are other options which would be more appropriate, such as performance reviews.
Who should I make redundant?
If there is one person in a standalone position and the role is no longer required, it’s fairly straightforward.
When there are two or more people in the same role, or similar roles, you must put them in a redundancy pool. This is the group of people being considered for redundancy, and the group from which you will make your selection.
If you’re looking to cut costs, you might focus on roles which are non-essential. That is, the workers might support the organisation, but they’re not in a profit-making role.
When do I need to tell staff about redundancies?
If you’re making one person redundant and they’re in a standalone position, you can skip to the individual consultation.
However, if you’re making several people redundant, and they’re not in standalone positions, you will need to inform them that they have been selected as a potential candidate for redundancy.
In some cases, employers will ask the pool of selected candidates if they would like to take voluntary redundancy. Some workers may take this up, especially if they were already thinking of leaving.
It’s essential that you give those in the selection pool plenty of notice about the upcoming redundancy process. You should also follow this up with a letter to those who it affects.
Selecting staff redundancies
When you have your pool of candidates, you will need to devise a way of fairly selecting the people who will ultimately be made redundant. This might include considering their attendance and disciplinary history, work performance, experience, and skills.
For example, if you have two employees undertaking the same role; one always hits or exceeds targets, whilst the other one does not. It makes sense to keep the employee with the best record.
You must be extremely careful to only select employees for redundancy using factual, and fair data. Employers cannot choose someone for redundancy based on the protected characteristics;
marriage and civil partnership
If you are taken to an employment tribunal for a redundancy not based on factual information, it will be very difficult to prove why you have chosen the employee. The results could be costly.
What is the process for making someone redundant?
Our redundancy process chart shows a step-by-step guide to redundancy.
First consultation meeting
You should invite those being considered for redundancy to an individual consultation meeting, and ask for their comments. They have the right to be accompanied at this meeting.
The meeting is an opportunity to discuss voluntary redundancy. Employees can also raise any concerns or comments about the redundancy and selection criteria.
You should seek their opinion on any alternatives they could suggest, too. A fresh perspective can generate good ideas, and might even help avoid redundancies.
Remember to take notes throughout the meeting; you may need to refer to them later on.
Score employees against the selection criteria
Use factual information to score employees against the redundancy selection criteria. The data might come from performance and HR records, and you might also consider any information provided during the employee’s consultation meeting.
It’s important to consider the information from every angle. For example, if you base your decision on attendance, has the employee discussed a legitimate reason for being absent, such as a documented illness?
Second consultation meeting
If you are dealing with a standalone position, then there’s no need for a second consultation meeting. The second consultation is an opportunity to assess each persons’ scores, and to discuss this with the employee. Be prepared to make some alterations to the score if your employee raises valid points about it during their consultation.
The next stage is the final consultation, and you should invite them to this via letter with at least a few days’ notice.
At this stage, you will need to let your employees know whether or not they have been selected for redundancy.
Those that are selected must be given a letter confirming this, as well as other details such as their notice period.
If you are requesting that the employee works their notice, you must also try to find alternative employment options. Obviously, this is more difficult to do in small businesses, but in a large organisation there may be alternative roles on offer.
Inform them about any upcoming roles in the company and give them the opportunity to apply. Employers are expected to do all they can to avoid making redundancies, but obviously in many cases it’s simply not possible to find alternative employment.
The redundancy appeal process
The employee may believe that it was an unfair process or decision, and that they shouldn’t have been selected for redundancy. Employees do have the right to appeal a redundancy decision, and this should be made clear in the redundancy letter you provide.
You can arrange a meeting with them in order to discuss their appeal. The employee has the right to have someone accompany them to the meeting if the wish.
As the employer, you can either accept or reject the appeal. If you accept their appeal and the employee is on their notice period, simply cancel the redundancy. They’ll continue working on the same contract.
If they’ve finished working their notice period, you could choose to re-hire them. This will still be considered as ‘continuous service’, though they won’t have the right to redundancy pay if they’re re-hired.
If you reject the appeal, the redundancy continues as normal. And, as always, whatever the decision, confirm everything in writing!
What is the redundancy notice period?
If staff have been employed for less than one month, then you’re not required to provide a notice period. The statutory redundancy notice period is one week for employees who have been employed for up to two years.
If an employee has been employed between two and twelve years, they are entitled to one week’s notice for every year they have worked. Staff who have been employed for more than 12 years are entitled to 12 weeks’ notice.
Employees are only entitled to redundancy pay if they have worked with you for a minimum of two years. Statutory redundancy pay is calculated by considering:
The employee’s age
Their average weekly pay for the 12 weeks leading up to the date of the redundancy notice
Making employees redundant should only be done as a last resort. These are some options you might want to consider avoiding redundancies.
Furlough support and grants
If you are making staff redundant due to the Covid-19 (Coronavirus) pandemic, there may be other options. The Chancellor recently announced the government’s Winter Economy Plan, which might offer you a way to protect jobs.
Sometimes employers make staff redundant due to reduced workload, only to experience an upsurge a few weeks later. Instead of redundancy, perhaps consider offering employees fewer hours or flexible working.
Employees who work full time might actually like the opportunity to work part time, especially if it means keeping their job.
It’s important to offer employees other options if there are vacancies elsewhere in your company that they may be suitable for. This can help you keep hold of good employees too.
Just a few things to bear in mind when offering alternative employment:
Alternative roles must be offered to employees on maternity leave first.
A fair process must be followed for other employees interested in the role. For instance, an interview process.
The alternative role must be offered before their current contract finishes, and must be offered in writing.
They should not have to apply.
The employee should be offered a 4-week trial period for the alternative employment, to ensure it’s right for them.
Employees can refuse the alternative employment, but they must have good reason for this, such as:
It would mean taking lower paid work
Travel restrictions – e.g. they can’t get to the job or it would be too costly
Unable to do the job due to health restrictions
If they don’t agree but the reason is invalid, you may be able to refuse their redundancy pay. Just make sure that you can prove that their reasons aren’t valid.