The recent collapse of Lehman Brothers, the merger of HBOS with Lloyds and the nationalisation of Bradford & Bingley have removed any doubts that we face recession. The UK economy is already in serious difficulty and there is no obvious sign on the horizon that there will be any improvement in the short term.
Many businesses have already embarked on restructuring programmes which have resulted in compulsory redundancies and for organisations that have not yet had to face this ordeal, the guidelines set out below may help if you need to navigate the complex legal issues that must be addressed in order to ensure that a redundancy programme is carried out in a fair and reasonable manner.
Redundancies
The emotional and psychological impact that announcing redundancies will have on your employees should not be underestimated. The announcement of redundancies will come as a shock and should be in mind at all times. As the redundancy programme is implemented, the feelings of both affected and unaffected staff should remain a primary concern in order to maintain goodwill and staff morale.
Structure
A redundancy programme has a beginning, a middle and an end. It is vital to follow a fair procedure to ensure that the process is managed in a way which ensures that the business objectives are achieved whilst treating the individuals who are affected with dignity and respect.
Every person who is identified as being at risk of redundancy (and many of their colleagues who are "safe") will inevitably be unhappy, but it is to be hoped that if the process is managed carefully they will recognise that they were treated fairly during that process. This is important not only in managing employment tribunal litigation risks but also in establishing a culture whereby those employees who remain feel reassured and appreciate that the organisation can deal with difficult business decisions in a fair and humane manner.
Communication is key
Consultation and communication are key to managing a successful redundancy process.
Consultation is carried out at two levels:
- Collectively;
- Individually.
Collective consultation is only likely to be required where 20 or more posts are at risk of redundancy. In an organisation where there is a recognised trade union, then the collective consultation process should be carried out with the appropriate trade union representatives. In an organisation where there is no recognised trade union, it will be necessary to elect representatives from the affected group of employees to consult with management on issues including:
- avoiding redundancies;
- minimising the number of redundancies; and
- mitigating the consequences of redundancies.
It is also advisable to consult with the collective representative body on the proposed redundancy selection criteria and the method of identifying appropriate pools for employees being at risk of redundancy prior to the commencement of the formal redundancy programme.
Notwithstanding the rules regarding collective consultation, it is always necessary to consult individually with each person who is identified as being at risk of redundancy. Individual consultation meetings can be the most crucial element of a redundancy process. If they are conducted professionally and sensitively they can cushion the blow of the announcement and give the affected employees a level of support during a period of great uncertainty. If handled badly, they can add to an individual's level of distress and can spread resentment throughout the team.
Individual Consultation
Notwithstanding the rules regarding collective consultation, it is always necessary to consult individually with each person who is identified as being at risk of redundancy. A basic overview of the process commonly adopted is set out below:
First consultation meeting with individual
- Inform individual that their role is 'at risk'
- Don't give any impression that the redundancy is pre-determined. If you do so then that could mean that the dismissal is automatically unfair on procedural grounds.
- Ask for their views on alternative options to redundancy
- Offer any opportunities for re-deployment or vacancies
- Follow up in writing
- Review meeting booked for alternative date
Second meeting
- If any alternatives to redundancy brought at this meeting could adjourn to review at a third
- If a pool, scores need to be given in accordance to the selection scoring matrix
- Individual offered the opportunity to challenge the scores
- Follow up in writing
- Final meeting booked
Final meeting
- Inform the employee that their role is redundant and deal with any outstanding queries that they may have.
- Individual to be offered the opportunity to appeal
- Document all in writing
Should an appeal against dismissal be made then issues relating to the redundancy selection pool, the scores which were given and the selection matrix which was applied may be challenged so it is important to ensure that a person who was not previously involved in the redundancy selection decision can review the process from an impartial and objective point of view.
What should I do next?
Managing a redundancy programme is never easy. However, through careful preparation with your legal advisers together with sensitive handling of the individuals who are affected, it is possible to minimise emotional and psychological distress and also reduce the risk of employment tribunal proceedings being brought against you.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.