Top Tips for Employers Planning Redundancies

Claire Treacy, Senior Associate

With the announcement of the Government’s Employment Rights Bill which is designed to offer more protections to workers and Rachel Reeves’ announcement in the budget that employers’ national insurance contributions will be increasing from April many businesses will unfortunately be considering whether redundancies will be necessary.

To help businesses navigate their way through the process here are our top tips for carrying out a redundancy process, because if you get it wrong the additional costs in Employment Tribunal claims can outweigh the savings you needed to make.

1. Plan your process in advance. Once employees have been informed they are at risk of redundancy many businesses will be faced with a large amount of questions. Having a clear plan in place from the outset will not only ensure the business understands what is going to happen, but will help you to be able to answer employee questions. Employees that feel they are up to date and know what process is going to be followed, in our experience, are less likely to become disgruntled and pursue a claim.
2. Have in advance a clear business case for the proposed redundancies. For employees with 2 years’ service or more (although this is set to change) fair redundancies are only permitted in certain circumstances. Businesses are therefore well-advised to have strong business cases setting out the viable reason for redundancies that can be shared with employees. Again, employees that understand the business case and can appreciate why redundancies are necessary are less likely to dispute the redundancy process. Business cases are also a good way of employees appreciating that the decision to place them at risk of redundancy or make them redundant is not personal.
3. Be alive to protected characteristics and discrimination risks. Where employees that are at risk of redundancy have a protected characteristic it may be that adjustments need to be made to your selection criteria to avoid successful claims of discrimination. Therefore, businesses would be well-advised to review the make-up of their workforce that is at risk of redundancy before starting the redundancy process. For example, it might be necessary to make adjustments to your selection criteria and how you will score against them for employees with a disability such as where attendance or performance have been impacted by their disability.
4. Understand whether collective consultation obligations apply. This will depend on the number of redundancies you are proposing to make within your business and in what timeframe. If you are proposing to make 20 or more redundancies in any one of your establishments within a 90 day period then collective consultation obligations will apply. These obligations are a lot more stringent than obligations where there are less than 20 proposed redundancies and the repercussions of failing to abide by these obligations are expensive.
5. Listen to your employees. For there to be a fair redundancy process the consultation must be meaningful. Therefore, employees must be listened to and businesses should be open-minded to there being changes in the process and to decisions. Whilst it is important to plan redundancy processes they should be fluid to take account of what is said during the consultation meetings. For example, it may be that employees suggest different criteria that should be used in the selection process – if the suggestion is reasonable and the business does not have a valid reason for not using the criteria then the proposed selection criteria should be changed accordingly.
6. Be as transparent as possible with your employees. In our experience employees who feel they understand and are involved in the process are much less likely to pursue Employment Tribunal claims. It is also going to be much harder for employees to later criticise the fairness of a redundancy process if you have been transparent with them from the outset and the employee has not raised an issue with the particular element of the process at the time. For example, inform employees how long you expect the consultation process to last for, what the stages in the consultation process will be, why they have been put at risk of redundancy and what the selection criteria will be. Keeping a paper trail of all communications is key.
7. Plan, but be flexible with your timings. Other than where the collective consultation provisions apply, there is no fixed consultation period but it must be long enough to be meaningful. Therefore, there is a fine line to be struck between not allowing a redundancy process to drag on causing unnecessary stress for employees and work for the business, whilst ensuring that the process is not rushed. If the process is rushed then the business could be criticised and penalised for not allowing a fair consultation process to take place. What is a reasonable amount of time for a consultation process for one business and cohort of employees will not be the same for another. Careful consideration needs to be given to how long is likely needed to fairly carry out the process and whether anything said by the employees during the consultation meetings means that the intended timeframe needs to be changed.
8. Decide if offering voluntary redundancy is a good option for your business. To implement a fair redundancy process employers are under an obligation to consult on ways to avoid or mitigate the impact of the redundancies. A good way to do this can be offering voluntary redundancy. However, businesses will need to first consider if they are going to offer enhanced terms to incentivise individuals to take voluntary redundancy (ensuring the terms are not discriminatory) and what they will do if they receive too many applications or applications from the “wrong” individuals.

If your business wants to discuss an ongoing redundancy process, or if you are intending on starting a redundancy process please contact us on 0161 832 3434.

Our redundancy solicitors also answer some frequently asked questions about redundancy processes on our redundancy webpage which can be accessed here – Redundancy Procedure For Employers | Redundancy Consultations Manchester | Kuits.