We wrote recently about people planning for a sustainable future and know that redundancy is on many employers’ minds. With news that the UK economy shrunk by 20.4% in April 2020, and the furlough scheme winding down, businesses are revisiting their operational structures to ensure their survival. We have set out key considerations here.
Make a plan
You will need to consider a range of things here:
- What does your ideal structure look like? The support in our article on people planning will help.
- What are the legal requirements and timeframes of a redundancy or restructure process? You will need to plan for the fact that consultation must last for certain minimum periods:
- where the employer is proposing to dismiss 100 or more employees consultation must begin at least 45 days before the first dismissal takes effect
- where the employer is proposing to dismiss between 20 and 99 employees consultation must begin at least 30 days before the first dismissal takes effect
- there is no minimum consultation period for fewer that 20 employees, the requirement is to be reasonable
- How will you select people for redundancy? Do you need to create a matrix of people vs skills? You can find a free template in our members area.
- What notice periods are in place? Contractual or are you able to give more notice?
- Will you make statutory or enhanced redundancy payments? Check out your employee handbook if you have a policy there. Don’t forget to factor in these costs into your plans.
- Is there accrued holiday that will need to be paid out? Again, factor those costs into your plan.
- What other support you will be offering to help outgoing employees? Can you offer outplacement support to help them secure their next role in a challenging job market?
- How you will engage with those remaining behind to harness their best in the new normal?
Yogi Berra illustrates our point nicely: “If you don’t know where you are going, you’ll end up someplace else.”
Explore alternatives to avoid redundancies
It is part of your duty as an employer to do what you can do minimise the risk of compulsory redundancy. Work through this list and be creative so that you have done all that you can before taking any final decisions.
- Alternative roles
- Alternative locations
- Retraining
- Reduced hours / days on a permanent or temporary basis
- An overtime ban
- A recruitment freeze
- A freeze on contractors
- Voluntary redundancies
- Early retirement
- Furloughing during the 2020 pandemic
- Accessing all the financial support available to your company
Consult
Consultation is when you sit down with each employee who might be affected and explain your plans to get their feedback. Your plans shouldn’t be finalised until the end of your consultation period so that you can include any suggestions or ideas you agree with. You should consult on the whole process, including your selection criteria and appeals, as well as the overall structure you are moving towards.
During the coronavirus outbreak it’s likely that you’ll need to do this remotely – there is no legal requirement to consult face to face. While you can do this via post or email, we would encourage you to look for other ways to consult , for example over the phone or using video or conference-calling. Done well, this will make the process easier and will lead to better engagement of those retaining their roles.
You must sit down with each employee individually to explain changes and get their ideas and feedback. The meeting can take place over the phone if you both agree to it and there is a clear need, for example if someone works remotely.
If you’re planning to make 20 or more employees at the same workplace redundant within a 90 day period (called a ‘collective’ redundancy’), you need to consult your recognised trade union where you have one, or elected employee representatives in addition to the individual consultation described above.
Selecting for Redundancy
If you are reducing the number of employees in a team, you will need to select for redundancy in a fair way. It’s a good idea to use selection criteria to help you choose which employees to make redundant, and these can be tailored to suit your Company. Usually we see criteria such as:
- standard of work
- skills
- qualifications
- experience
- attendance record (providing you are not including absences due to disability, pregnancy or maternity)
- disciplinary record
It goes without saying that you should avoid making decisions on the basis of characteristics protected y the Equalities Act, which would be discriminatory. As are the following:
- shielding during the pandemic
- family related leave such as parental, paternity or adoption leave
- role as an employee or trade union representative
- trade union membership
- part-time or fixed-term hours status
- requests for pay and working hours in line with statutory minimums
Notice of Redundancy
You can only give an employee notice of redundancy once you’ve finished consulting everyone and when any minimum time frame has passed.
You will need to confirm the redundancies in writing, but we’d advise you tell the individual in person before you do so. Your conversation and your letter will need to cover the following:
- whether they are receiving pay in lieu of notice, if their contract allows
- their notice period – statutory notice periods are the minimum needed unless your contracts set out more generous timescales
- their leaving date
- how much redundancy pay they’re due
- how you calculated the redundancy pay
- any other pay you owe them, such as holiday pay, care allowance, commission
- when and how you’ll pay those amounts. This should be no later than an employee’s final pay day, unless you both agree another date in writing.
- how they can appeal
- any other support available to them during their notice
If you tell the employee face to face, their notice should start from the next day. Bear in mind that if you send the employee a letter or email, they must have a reasonable amount of time to read it before their notice starts. So we’d advise you set up a delivery and read receipt where you email over the written notice or use registered or special delivery where you use the post.
Redundancy Payments Service
If making redundancy payments puts your business at risk you can ask the Redundancy Payments Service (RPS) for financial help. The RTS is part of the Insolvency Service and can make statutory redundancy payments directly to the redundant employees on the employer’s behalf even where they are not subject to insolvency proceedings.
The alternative is that, where the employer does not pay statutory redundancy pay, employees can apply to an employment tribunal for a judgement awarding them redundancy pay.
If you need help with redundancies or any of the issues set out here, reach out to Redway HR today.