The coronavirus pandemic has led to many businesses having to make people redundant. This is always not an easy process and one has to be careful in order to avoid legal fines. Here is a guide to help employers navigate this process.
What is Redundancy?
Redundancy is explained in section 139 (1) of the Employment Rights Act 1998. It is a form of dismissal where the employer relieves someone of their job because the role no longer exists. This might happen when the business closes, certain work is no longer required or the employer needs to reduce the workforce because of cost.
Types of Redundancy
Non-compulsory or voluntary redundancy should be the first step before moving to compulsory redundancy. Voluntary redundancy is where the employer asks the employees if they will like to volunteer to be made redundant. You can decide to offer a certain benefit to make this option attractive. Some employees might find this option useful if for example, they are contemplating a career change. Allowing employees to volunteer helps you save the employees who really need the job.
Compulsory redundancy should always be used as a last resort. If offering a voluntary redundancy process and taking steps to avoid redundancy all together does not work and the firm still needs to let go of some more employees, then the firm can use compulsory redundancy. To initiate this process an announcement has to first be made by the employer.
Is it a Redundancy Situation?
Before getting to the stage of redundancy an important question to ask is if this is a redundancy situation. To know if this is a redundancy situation you must answer yes to one of these questions:
- Is the business for which the employee was employed closing?
- Is the place of business where the employee was employed to work closing?
- Is there a reduction in the requirement to carry out work of a particular type?
Are There Other Alternatives?
Do not just jump into redundancy. Before initiating the process to make an employee redundant, it is important to first explore other options. If money is the reason for contemplating redundancy you can explore other ways of cutting costs, i.e. restricting overtime, reducing employees’ hours, offering early retirement with some benefits, reducing your use of casual labor, and other cost-effective ways.
Step by Step Guide to Redundancy
If after exhausting all options and you discover redundancy is the only option in the present case then here is a step-by-step guide to redundancy.
Have a clear reason
Before initiating a redundancy process it is important to clearly define the reason why you need to make some roles redundant. This will help you clearly and effectively communicate this to your employees. It is important to note that at this stage it is about making roles redundant hence the focus is more on the roles than on the employees.
Determine which roles will be affected
You need to create a redundancy pool from which to select the employees that will be selected to be made redundant. This pool should include all the individuals in the roles affected. If several employees perform the same job and are interchangeable then they all have to be included in this pool.
Warn employees that their post is at risk of redundancy
After selecting the roles at risk and creating the redundancy pool, the next step is to inform the employees within the pool that they are at risk of redundancy. You should also make it clear that this is just a proposal and not a conclusion. Without this step, there is a high chance that redundancies are going to be unfair.
Decide the redundancy selection criteria
Have a scoring chart in order to rank employees. Employees who rank the lowest can then be selected. The criteria used must be fair and easy to understand. You can use criteria such as attendance, disciplinary records, performance, etc. However, be careful when using criteria like absence records or length of service as this can be seen as discrimination based on gender and age respectively.
Have a consultation meeting with the employees
You are required to have a group meeting with all employees in the redundancy pool explaining to them the reason why the process was initiated, how many jobs are at risk, and why they are in the redundancy pool. It is also important to explain the selection criteria that will be used. You can also find out suggestions from them on how the firm can avoid redundancy or if anyone wants to volunteer to be made redundant. The minutes of this meeting should be stored properly.
Apply the selection criteria
If after you have carefully considered the employee’s feedback and suggestions and you decide to proceed then at this stage you should apply the selection criteria process selected and rank the employees. Ensure that this is a fair and consistent process and it might be useful to do this with a team of people. Have records of each employee’s assessments in written form.
Have an individual consultation meeting
This second meeting is to run through with each employee how he/she performed in the assessment and their score. They have the right to be accompanied to this meeting with a trade union representative or a colleague.
You can inform them of other opportunities for alternative employment and if they refuse this they may lose their right to statutory redundancy pay. After the meeting, you should consider any challenges to the assessment and consider alternative employment options.
Dismissal of employee
If after considering all you decide to make the employee redundant, then you should invite the employee into another meeting. In this meeting, you should explain your decision to the employee, their redundancy package, and the right they have to take time off work to seek alternative employment.
Your decision should also be made in writing to the employee and you can decide to either pay the required amount of notice or make a payment in lieu to the employee.
It is also important that you offer the redundant employee the right to appeal in order for the process to be considered fair.
Making employees redundant is always a tough decision to make. The redundancy process should be done fairly to avoid a claim of unfair dismissal. You have to use a fair and clear selection process and also consider suggestions made by the employees. Having a transparent process helps you have a fair process. The employee should also be allowed to challenge the decision made.