All businesses have to cope with change. Sometimes, this requires reducing, or even stopping, a particular activity. This could be to reduce costs, improve efficiency or productivity by reducing investment in declining areas or to consolidate after an organisation change. As a result, you may need to make some redundancies in your workforce.
It is very important that you handle redundancies properly. If you don’t follow the correct redundancy procedure, you might be exposed to an unfair dismissal claim.
We can help you plan and implement redundancies in your business. We have a lot of experience handling redundancies in both small businesses and large corporate environments.
There is a well-defined process for handling redundancies, with time lines that depend upon the number of employees affected. As a general guideline, the overall steps in a redundancy process are are as follows:
The amount of time you need to spend consulting with employees depends upon how many are impacted. If you have trade unions or employee representatives, you may also need to consult with them.
With individual employees that you have notified as at risk, you need to support them through the process. This means looking at suitable alternative roles within the business, if there are any available. You can also considering job sharing or flexible working options (if any) and address any questions the employee has. The intent is to ensure that every effort has been made to avoid the redundancy.
In consultations with representative groups and unions, you will need to cover both the business reasons for the redundancies and your proposed consultation process. You should expect be asked what you have done to avoid redundancies.
Where you are reducing the number of employees performing a similar function, you will need to define some selection criteria. You must run a fair selection process. Therefore, you should choose these criteria carefully. In most cases, you use the selection criteria to stack rank the employees in the selection group. You then work up from the bottom until the required target is reached.
Some examples of selection criteria are shown below, although you can define others (as long as their fair). These would typically be scored on a scale from poor to excellent, or similar:
You must give statutory redundancy pay (SRP) to employees with more than two years’ service. This equates to one week’s gross pay for every full year of service. SRP is paid free of income tax and national insurance. You may also decide to make a discretionary additional payment, known as enhanced redundancy pay. If so, any enhanced redundancy pay is also free from tax and national insurance up to a limit of £30,000
The employee will also be entitled to pay in lieu of notice and for any accrued annual leave that hasn’t been taken.
We have managed numerous redundancy programs for employers of all sizes. For smaller businesses, we can help to administer the entire process for you. For large employers with in-house HR, we can support your HR team with running an impartial selection process, hearing any appeals, and so on.
If you are just reorganising internally without any redundancies, we can advise on change management strategies and managing any consents for changes to contractual terms & conditions.
Get in touch if you would like more information or to discuss your restructuring plans.
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