Top Tips for Managing Redundancies

Given the current economic climate businesses need to consider the possible impact on their organisation.

For many organisations their payroll is one of the biggest costs. Therefore, if there is a downturn in business, organisations will need to consider downsizing and making redundancies. Failure to act could put more jobs and even the business at risk.

But actioning redundancies needs careful planning to ensure the correct procedures are followed and full consideration has been given to the business needs. You need to stay in control of the process and be clear about the outcome you need to achieve.

If you do not plan you will fee out of control and the risk of the correct procedures not being followed will increase. You then run a greater risk of claims for unfair dismissal - at a time when your focus needs to be on managing the business through these rocky times. Unfair dismissal claims will take up valuable management time (and cost money!).

Our top tips cover some key areas to consider when considering redundancies:

1. A redundancy is a dismissal. Therefore the correct procedure must be followed in order to avoid claims for ‘unfair dismissal'.

2. Redundancy is about the work requirements of the employer - not about the performance of an individual.

3. You must carry out a fair selection procedure/criteria if there is more than one person in the same or similar position. The selection must be as objective as possible and stand up to scrutiny when an employee asks ‘why me?'.

4. You must consider alternatives to redundancy including alternative positions. Consider other locations and subsidiary companies. Even if the alternatives you identify have different terms (e.g. a lower salary) you should offer these where possible. It is up to the individual to decide if they wish to accept the alternative (an employee does not have to accept an alternative that is not a ‘reasonable' alternative, but the company should still consider and offer all possible options).

5. You must consult with individuals before any final decisions are made. This means employees will first be put ‘at risk' of redundancy.

6. If you are making 20 or less redundancies, there is no specific period of consultation set out in legislation. However, you should allow enough time for consultation and generally a minimum of two weeks would be recommended.

7. An employee must have two years continuous employment before they are entitled to statutory redundancy pay.

8. An employee needs one years service to be able to make a claim for unfair dismissal relating to redundancy.

9. The maximum amount for a week's pay which can be taken into account calculating statutory redundancy pay is (currently) £350.00 (due to increase in Oct 2009 to £380.00 per week. This figure is generally reviewed every February.

10. An employee being dismissed by reason of redundancy is entitled to notice as set out in their contract of employment or statutory notice - whichever is greater. You may require an employee to work all or part of their notice (or may make a payment in lieu).

11. Additional consultation rules and procedures apply if the company is considering dismissing 20 or more employees are to be dismissed at one establishment within a 90 day period.

12. It will be unfair to select employees for redundancy just because they are part time. Part-time employees have the same rights as full-time and all procedures should be followed.

13. You must give written details of redundancy payments to redundant employees.

14. You may wish to consider laying staff off staff or putting staff on short time working as an alternatives to redundancies (or to reduce costs) - if you have the contractual right to do so. If you don't have these provisions in your contracts of employment consider updating your contracts of employment (call Practical HR).

15. A further alterative to redundancies is to consider salary reductions or other changes in terms that will allow the busienss to reduce cost - but retain positions.

If you require any advice or support relating to redundancies, please contract Practical HR on: 01702 332160.