Managing redundancy in your business

Managing redundancy in your business

In our recent article, Claire McGuinness discusses redundancy, offering advice on how to manage the process and alternative options to redundancy.

With months of continued rising costs, labour shortages and a downturn in the economy, small businesses have faced many challenges in 2023. In May this year, ACAS carried out a survey on redundancies. The results showed that 30% of employers were likely to make redundancies in the next 12 months. In addition, according to the latest figures by the Office for National Statistics, the number of UK companies considering redundancies is at a record high.

Making staff redundant is the last thing that any business wants to do. Employers should exhaust all possible alternatives to reduce the number of redundancies necessary. However, if employers feel like they have no alternatives then they must follow the law in this area. Failure to do so could result in a costly legal process. 

Alternatives to redundancy include:

  • Look for applicants for voluntary redundancy or early retirement
  • Seek applications from existing staff to work flexibly
  • Laying off self-employed contractors and freelancers
  • Not using casual labour
  • Restricting recruitment
  • Reducing or banning overtime
  • Filling vacant positions elsewhere in the business with existing employees (even if training may be required).
  • Reducing hours or temporary lay-offs

Getting the redundancy process right

If you have considered the above and still need to make redundancies, it is important you get the process right. Getting this process wrong could result in employment tribunal claims. The financial impact of this could be detrimental both from a cost and time perspective of defending the claims and also if the claims are successful.

When redundancies are unavoidable, employers have legal responsibilities and guidelines to adhere to. The mental health and welfare of everyone who is involved should also be a consideration.

Where redundancies are involved, we must remember that it is positions that are made redundant and not people in those positions. Therefore, it is important to have a fair selection process when a position or job role is identified as being redundant and more than one person is currently employed to fulfil it. This process paired with the appropriate consultation period for the numbers being made redundant, is crucial.

Employers must follow the ACAS code of conduct if they plan to make redundancies.  Employers must discuss any planned changes and meet with every employee who it may affect. In addition, employers wish to make 20 or more staff redundant within a 90-day period, they must also consult a recognised trade union or elected employee representatives.

For 20-99 redundancies, consultation must start at least 30 days before the first dismissal, and for 100 or more redundancies it has to start at least 45 days before. There is no set time period for less than 20 redundancies, but the length of consultation must be reasonable

Key considerations during redundancies:

  • Think carefully about your business and the group of people at risk.
  • It is a difficult process for you and your staff, so getting the communication strategy right, including a consistent message, is very important.
  • Consider the timescale of your redundancies.
  • Determine what roles will be placed at risk and what selection criteria will be used. It is really important that you get this process right and avoid any criteria that may be directly or indirectly discriminatory.
  • Conduct meaningful consultation meetings. You will need to have at least two meetings with your employees to discuss the reason for redundancy, the selection criteria used, any alternatives or other roles and any suggestions or concerns raised. Employers need to consider alternatives to redundancy and be able to demonstrate this.
  • Employees have a right to request representation at all consultation meetings which can be useful for both parties.
  • You will also need to set out what redundancy payments will be made.  If an employee has 2 years’ service or more, they will be entitled to a statutory redundancy payment as well as:
    • Holiday pay for any accrued untaken holiday (if applicable); and
    • Notice pay (this can be worked if required or paid in lieu)
  • Once the consultation is closed and you’re giving formal notice of dismissal hearings, be sure to follow the correct procedure including adequate notice, the right to representation and the right of appeal
  • You do not have to have all the answers during the consultation meetings, however, any concerns or questions that are raised should be responded to prior to the next meeting, where possible.
  • Keep notes of all discussions with staff and send confirmation afterwards.
  • During the termination process, consider the impact on your employees. Redundancies are difficult; therefore, people may struggle with the impact of the redundancy. It isn’t just about who has been made redundant. Those that remain may struggle and there should be a plan for what happens after the redundancies. 

How can HPC help?

Please get in touch to discuss how we can help support you if you are facing difficult decisions around redundancies. Our team has a depth of knowledge and experience of redundancies and can help you make the right decisions.

To find out more information about how HPC can support you with redundancy, get in contact with our team of experts.

T: 0330 107 1037


Twitter: @HPC_HRServices

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