Since the start of this year, some of the worlds’ largest companies: Twitter, Amazon, Alphabet, Microsoft and Salesforce, to name a few, have laid off thousands of workers. A post pandemic consolidation, the current global economic instability, and AI have been blamed, amongst other things.
This trend looks set to continue.
Staff are often a company’s biggest expense, and many will need to reduce headcount to save money at some point. Making redundancies is not something that companies want to do and it’s obviously upsetting for those losing their jobs. However, there may be more than an emotional price to pay if they’re not done properly.
Take advice early
Redundancy law in the UK isn’t complex but does need to be followed; if you don’t have a dedicated people or legal team invest in specialist advice before you start the process (see our HR Legal Counsel Service). Give yourself time to plan and make sure the team responsible for implementing redundancies knows what they are doing, has a timetable to work to, and keeps stakeholders informed.
Here are some things to look out for:
- Redundancy has a special legal meaning which, broadly, only applies where a business has a reduced need for staff e.g. because work has changed or new technology has been introduced or it is closing down. It is the role, not the person, which is redundant, so make sure there is a good business reason for removing it.
- Ensure that any decisions you need to make are not perceived as pre-determined, initially refer to ‘proposals’ rather than certainties. Listen and respond to any representations from staff about ways of avoiding the redundancies so they feel that consultation is genuine. Keep notes of all meetings with staff.
- Don’t be tempted to indulge in ‘headcount housekeeping’ and get rid of someone under the cover of redundancy if their role is still needed. This is risky.
- If you are planning on more than 20 redundancies at one place of work, you will need to consult with employee representatives and notify the government. This will take longer; your timetable will need to be extended accordingly.
- Don’t forget staff who aren’t in the office or working for any reason (parental leave, long-term sickness, home workers etc.) – make sure they receive all communications at the same time as everyone else.
- It’s good practice to ask for volunteers for redundancy if you can. But make sure you reserve the right to refuse someone who you need to keep in the business.
- If you need to choose staff from a group (pool), it’s important that you use a fair method for selecting them. This will involve using demonstrable, objective factors such as level of experience or capability. It’s best not to rely on subjective factors like ‘commitment’ or ‘enthusiasm’ which could be open to challenge or the old-school LIFO (last in first out).
- Avoid any selection method which is discriminatory. This is not always easy to spot, but you need to make sure that any scoring process does not unfairly disadvantage those who have been absent through illness or because of children or caring responsibilities and that older or younger groups of employees are not prejudiced by the type of assessment used.
- You need to keep an open mind throughout any redundancy process and keep looking for ways of avoiding the redundancies. This means letting staff know about any internal vacancies – even if these are more junior opportunities and including those at any associated / group companies. Keep considering whether job losses are necessary. Are there other measures such as asking staff to cut hours or reduce benefits that could be tried first? Document your considerations.
- Staff who are being laid off must be allowed time off to attend interviews.
- There are special rules for those who are absent on maternity, paternity or adoption leave – they must be offered any internal vacancies before other staff.
- Staff who have been employed for at least 2 years will be entitled to a minimum redundancy payment on top of any notice pay. The formula for calculating the payment is laid down by law, based on an employee’s age, pay and length of service.
- Staff who have been employed for at least 2 years can also bring a claim of unfair dismissal if they are not genuinely redundant or a fair process isn’t followed. See our previous blog on the Redundancy Process.
- Staff who have been employed for less than 2 years may be able to claim discrimination if they can show they were let go because of their sex, race, age, disability, etc.
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