Redundancy Part 2 - The Process

My last newsletter covered the People aspect of redundancy, this time, we need to focus on the Process.  I want to share my thoughts and experience about what the process should look like.

I still add here that legal advice is crucial. Especially with the added complexity of furlough!

The Process

There are eight clear steps to be considered:

1)   The Plan

2)   Identifying the Pool for Selection

3)   Seeking Volunteers

4)   Consultation

5)   Selection for Redundancy

6)   Making the Decision

7)   Appeals

8)   Redundancy Pay

1)   The Plan            

Understanding the steps involved and how you want to implement the process, enables you to have a clear focus of how to implement redundancies in the most effective manner, for both those leaving and those staying. Your organisational values can significantly influence how you perform this process, and how people experience it. It is important to remember the statement “make the decisions dispassionately and implement them compassionately”  You can still maintain a strong reputation about being an Employer of Choice if you handle this process effectively. 

If you are making more than 200 people redundant you must inform the Redundancy Payments Service, who act on behalf of the Department of Business, Energy and Industrial Strategy.

2)   Identifying the Pool for Selection

It is important to consider whether everyone in the organisation sits within this pool, due to the virus. Or should you consider the advice of the CIPD (Chartered Institute of Personnel and Development) where you narrow the selection pool to consider those who

·      undertake similar work to each other

·      work in a particular department

·      work at a specific location

·      has their work ceased, or reduced or is expected to do so.

It is possible that you consider more than one of these groups. It is important to ensure that no one group of people are unfairly affected by being a member of this group e.g part time roles are frequently occupied by women. An equal approach needs to be taken to comply with legal requirements.

As many organisations have been badly affected by the virus, it becomes a choice around which roles have been impacted most, or which roles can the organisation manage without?

It is difficult to remember that these decisions are about the greater good for the organisation in the long run. The business will survive for the many, at the cost to the few, if we make these tough decisions at the right time. If we don’t, we risk losing the whole of the business for the whole of the workforce.

3)   Seeking Volunteers

Once your decision to make redundancies has been made, and as discussed in my earlier article, you have considered possible alternatives to redundancy, it can be a positive move to look for volunteers.

Offering a voluntary package can be attractive to employees who are ready to move on. It also enables people to make the decision for themselves.

Organisations often enhance the voluntary package which can help numbers of volunteers, though can be more costly to the organisation, which may not be an option at the moment.

The challenge is that you may not want everyone to have this option.  To protect the skills, people and departments where you can’t afford to lose people it is important to manage expectations. It is also advisable to create the selection pool and then offer them the voluntary package.

4)   Consultation

Legally consultation is required where more than 20 people from one establishment are being made redundant. This consultation period varies

·      20-99 redundancies = 30 days consultation

·      100+ redundancies = 45 days consultation

The consultation period must be completed before final notices of dismissal are issued to individuals. If you are a union based organisation you would include the TU representative in creation of this process. If you don’t have unions then do involve a staff representative. If you have neither, then you need to know that the consultation should cover the following areas:-

·      The reason for the redundancy

·      The number of proposed redundancies and the job types

·      Total number of employees affected

·      Proposed methods of selection

·      Procedure to be followed

·      Method of calculating redundancy payments.

If these aren’t included, then the redundancy process may be deemed unfair and incur compensation payments for those affected.

If employers fail to collectively consult, they can incur an extra compensation payment of up to 90 days per employee, which is known as a protective award. This is a significant cost at a time where the organisation is already suffering financially.

In organisations where less than 20 people are at risk of redundancy, there is no minimum consultation period. However, it still needs to be a meaningful process, and it is advisable to follow the above structure and content. Compliance with any internal policies and procedures is also important.

Each employee should receive a written notice informing them that they have been put at risk of redundancy. This letter should also invite them to a one to one, and they must have at least one of these meetings. The employer must ensure that the employee is listened to appropriately. In these meetings the employee has the right to be accompanied by a Trade Union representative or a colleague.

5)   Selection for Redundancy

Once consultation has been completed, the hard decision is to choose who you will make redundant. This should be based on a clear set of objective criteria that have been shared during the consultation:

·      Length of Service – last in first out should not be a criteria in it’s own right, but used in combination with the other areas.

·      Attendance record

·      Disciplinary record

·      Skills, competency and qualifications

·      Work experience

·      Performance record

It is advisable to create a points based system to clearly and objectively assess how individuals can be rated against the criteria. It is also important to have a strong paperwork trail to support these points.

As mentioned earlier, it is important that the criteria can be assessed equally across all groups of employees. If any group is unfairly affected it can lead to discrimination.

Ideally two difference managers, who know the whole work force, will complete this process separately and then bring their results together, to ensure fairness and no collusion.

6)   Making the Decision

On completion of the above steps, those selected must receive a written redundancy notice. This will outline either the statutory minimum notice, or the contractual notice period, which ever is greatest. This will also include details around payment calculations.

7)   Appeals

There should be a clear appeals process, which involves different people to those who made the original decision, and they are usually more senior within the organisation. Identify who this will be before beginning the process, to ensure you have unbiased individuals to turn to if appropriate.

Be aware that redundancies will be automatically unfair if the decisions were based on:-

·      Trade Union membership, or not being a member,

·      Part time position

·      Maternity or pregnancy

·      Age, sex, sexual orientation, marital status, disability, race, religion, or other characteristics unlawful under the Equality Act 2010.

8)   Redundancy Pay

The rates for redundancy pay can be found on the government website https://www.gov.uk/ There are clear calculators on this site, and it is best to review that in detail. Pay is influenced by:-

·      Length of service

·      Age

·      Weekly wage.

There is a great deal of information to consider when making redundancies. There are also a large number of websites with useful information. Have a look at:-

·      https://www.acas.org.uk/redundancy

·      https://www.gov.uk/browse/working/redundancies-dismissals

·      https://www.gov.uk/calculate-your-redundancy-pay

·      https://www.cipd.co.uk/knowledge/fundamentals/emp-law/redundancy/factsheet

If you would like any further advice, please do not hesitate to get in touch.