ARE YOU “AT RISK” OF REDUNDANCY BUT DON’T KNOW IT?

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ARE YOU “AT RISK” OF REDUNDANCY BUT DON’T KNOW IT?

As many of you will be aware, some changes in redundancy protection were introduced on 6?April 2024 (see below). Therefore, I thought I would dust off a newsletter I posted in January 2023 and update it to reflect the economic situation nearly 18 months later.

Well, brace yourself. Despite the upbeat news this week, the Office for National Statistics (ONS) reports that the UK redundancy rate rose to 4.6 per 1000 in the three months to January 2024—the highest since 2021. ?On the bright(er) side, the British Chambers of Commerce (BCC) has upgraded its forecast with growth expectations for 2024 and 2025; however, it warns that growth will be slow. Many struggling (or panicking) businesses can’t wait it out.

So it turns out that, unfortunately, my article needed only minimal editing.

Why the rise in redundancy and restructuring exercises?

Everyone has been feeling the great Stagnation, the persistent economic slump that has been going on for years. We all have felt an increase in our cost of living with the rise in energy costs, high inflation, high interest rates and a fall in real income.

All this comes from the strains in supply chain and market issues resulting from the wars in Ukraine and Gaza and Brexit continuing to hit the headlines with yet another unforeseen consequence, to name a few. Companies in the financial doldrums are then faced with the question of how to save costs. It’s not rocket science; the obvious answer is job cuts. Reducing headcount and cutting the wage bill is seen as the fastest and (by perception at least) easiest fix.

The rules governing the redundancy process do place some constraints on employers looking to reduce headcount?(the consultation process allows some breathing space for those placed “at risk”), but looking out for the early signs is crucial in putting yourself in the best possible starting position if your role is deemed to be one of those under threat.

Spotting the signs

Employers will keep news of possible redundancies quiet until plans are advanced. People you know losing their jobs at competitor companies is a good indication that your industry is facing challenging times. Further hints that you are at risk are pay freezes and the halting of discretionary bonuses and perks. Have you noticed that your equipment hasn’t been upgraded in a while or that there was a lack of budget for staff dos?

Alarm bells should also ring if you and your team feel overworked but vacancies have gone unfilled for months. Recruitment freezes show that your company is trying to cut costs. There may also be signs that your risk of redundancy is higher than your peers. Signs such as unusually close supervision, criticism of your work, a relative decrease in your workload and responsibilities, or reduced client access should be on your radar.

The term “quiet firing” (what I coin the “coward’s approach” to redundancy) was doing the rounds in 2023. For those of you who missed it, this is an ages-old employer's tactic and involves making an employee’s working life as uncomfortable as possible to try and induce a voluntary resignation, thereby removing the need for costly redundancy processes and severance packages. This could range from moving you to a less interesting or lower profile project, decreasing or even increasing your responsibilities to put pressure on you, denying you a promised promotion, well-deserved bonus or annual pay rise. It’s a tactic often used against employees with less than 2 years of service as (except in limited circumstances) they can’t claim unfair dismissal. However, there could be legal ramifications, including potential claims for automatic dismissal or discrimination. Even if you don’t have 2 years of service, get legal advice if you fear you are a victim of this practice.

If you are at risk – what should you do?

We’ve all been in a position where, in a seemingly secure role, the pains of CVs and interview processes seem but a distant bad dream. If you may be at risk of redundancy, it’s time to pinch yourself and dust off that old CV. It’s never a bad idea to be overprepared. Update your CV with your latest roles and experiences and start speaking to recruiters. LinkedIn has an option that displays your profile as “open to new roles” for recruiters but not when colleagues click on your profile. Remember, in a shrinking market, the early bird catches the worm.

Research the market. Is this an opportunity to change sector, role, or even make a complete career change? Recruiters can be excellent sounding boards here and will have a wealth of knowledge on aspects such as the salary and benefits you could reasonably expect. Even if you wish to stay in your role, brushing up on your strengths and achievements will increase your confidence and place you in good stead to showcase your value to the business and bolster your case in consultation meetings. You won’t be given much notice before your first consultation interview, so collate your skills well in advance to ensure you give yourself a fighting chance from the get-go.

Recent changes in redundancy protection for employees

As many of you will be aware, some changes in redundancy protection were brought in from 6?April 2024. The Redundancy (Pregnancy and Family Leave) Act 2023 provides protection for employees when they return from maternity, adoption and shared parental leave, from the time pregnancy is notified to beyond the return from leave.

Previously, employees on maternity leave (or shared parental or adoption leave) had special protection against redundancy. However, employers were only legally required to offer suitable alternative employment to these employees over other employees if their original job was at risk of redundancy. This was limited to the duration of the relevant leave.

The Redundancy (Pregnancy and Family Leave) Act 2023 extended this protection to Pregnant employees from the time they inform their employer of their pregnancy until 18 months after the child’s date of birth. Employees on adoption leave are protected during the adoption leave plus 18 months from the placement date. Those exercising shared parental leave are protected during their leave plus an additional 18 months after birth (provided they have taken at least 6 weeks of continuous shared parental leave).

This doesn’t mean you can’t be made redundant, however. I suggest you inform your employer of your pregnancy early so you are protected going forward. This may seem counterintuitive, as I understand that many women fear telling their employers that they are pregnant as they believe, often quite rightly, that it puts a target on their backs. Each circumstance is different, though, so take advice.

Know your rights

Redundancy law can be tricky to navigate, but equipping yourself with knowledge of your fundamental rights will go a long way should you be thrown into the consultation process. The ‘fairness’ of a redundancy process is where a claim (or negotiated settlement) is won or lost.

The first step is to ensure there is a genuine redundancy situation, such as the closure or relocation of the business or the reduction in the number of people required to carry out your particular role. Employers can't make someone redundant simply because they do not like you, or because you have blown the whistle, are a trade union member, or are pregnant or on maternity leave. If you believe you are being singled out for redundancy for a reason such as this or any other discriminatory reason, you should take legal advice early so you can pose pertinent questions during the consultation process. This will assist with settlement discussions later on.

Employers must also follow a fair process, which includes genuine and meaningful consultation with you at an individual level and possibly also collective consultation with your representatives, depending on the numbers involved. Importantly, this needs to be done at an early stage of the redundancy situation and before any decisions have been made.

If you are placed into a 'selection pool' for redundancy, your employer must apply objective (not subjective) non-discriminatory selection criteria when selecting those from the pool who will be made redundant. Selection criteria might include skill and experience levels (including future skills needed), performance history and disciplinary records – not ‘gets on with people’ is ‘a nice guy’, or ‘fits in’. Hold your employer to account. Ask for the selection criteria and your scores for you to review. Ask your employer to justify why those criteria matter to the role and how they have arrived at your scores, and ask for the set of scores (with names redacted) so you can compare your score against others. If it doesn’t make sense, object.

It is sensible to come armed with proof of your performance across the chosen criteria, including examples (and data, where possible) of your successes and career-high points – now is not the time to be coy. View this as a mini (re)interview for your (or a suitable alternative) role. When you get your score, again, hold your employer to account. Ask HR to justify how they have scored you in each category (employers are increasingly using AI to determine who is at risk of redundancy – watch out for this as often the algorithms are tainted with discrimination on account of the programmers' unconscious (or let's face it conscious) bias.

You may be able to bring specific evidence and explanations to light that assist your case. Start pulling together questions for HR – “what is the process?” and “how have you identified the selection pool?”, ‘who is making the decision?’, ‘ when was the decision made?’ – let’s face it, more often than not, the employers have already decided who is in and who is out before the consultation has concluded and, in some cases, even started. These problematic questions often elicit information that can be used in negotiations for a settlement.

Making the most out of a redundancy

It may be the case that, having clued yourself up on your options, redundancies are announced at your workplace, and your employer offers the possibility of voluntary redundancies. Voluntary redundancies do what they say on the tin; those who accept will still receive a redundancy package, and the company will avoid/decrease the number of involuntary redundancies it has to make. If you’ve found another role you prefer, being prepared here could work in your favour.

Ensure you are fully aware of the terms of any voluntary redundancy package. However – do consider if it is more beneficial than being made compulsorily redundant following a consultation process? If you have income protection insurance or plan to claim any benefits whilst you are between jobs, you should ensure that these will not cease to apply if you opt for voluntary redundancy. Likewise, you don’t want to miss any bonus payment for the year or award of shares because your termination date falls before the bonus payment or vesting date. If you are unsure, take advice before you stick your hand up.

If you are faced with compulsory redundancy, many employers will offer you a settlement agreement with an enhanced redundancy payment in exchange for you giving up the right to bring any claims against them. Take your time to consider the offer, and don't get pressured by your employers' self-imposed timeframes for acceptance. Under Acas' guidance, you should be given a reasonable timeframe to consider the settlement terms, usually 10 days.

The terms of settlement agreements are up for negotiation. This includes not only the financial aspects, such as the compensation payment, notice provisions, bonuses, and shares, but also the non-financial aspects, including references, announcements, waivers of non-competes, and extensions to benefits. Consider what your next plan is. How easy will it be to find another role? Will you get the same package? Do you want to set up your own business or join a competitor? Answers to these questions will help you decide if the package is good enough or assist in formulating a counter-proposal.

To be legally binding, you must take legal advice on the terms of a settlement agreement. This is more than a simple sign-off, so don't wait until the deadline. I advise getting lawyer input early to assist you with negotiating and ensure you walk away with the best possible outcome. I have negotiated countless settlement agreements for outbound employees at all levels and across multiple industries, and I am always happy to have an initial chat before moving forward.

Being told you are at risk of redundancy and put through a selection process is never easy, even if you are confident that you will ultimately not be selected or that a redundancy package might not be the worst option. It can help to have someone by your side to support you in navigating this difficult time, ensure your employer complies with its legal obligations, and negotiate the best possible outcome for you.

Feel free to Get In Touch if you’d like advice on an anticipated redundancy, workplace dispute or discrimination claim.

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