I need to make someone redundant. What do I need to do?
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Lockdown has been hard on all of us, but for many business owners who took advantage of the Government-backed furlough scheme to mitigate costs, the toughest part could yet be to come with tough decisions to be taken around staff and redundancy.
A redundancy process can be fraught with emotion, stress and the pressure to do things correctly, and for
many businesses that don’t have the HR expertise in-house to deliver the process smoothly it can be a minefield.
In this, the first of a series of articles on the subject that are designed to help business owners and leaders through the tricky realities of reducing headcount, I’ll be offering you an overview of the things you need to keep in mind as you consider whether redundancy is the right way forward.
In the coming weeks leading up to the end of the furlough scheme, I’ll explain some of the specific requirements you’ll need to meet and the best way to ensure you deliver outcomes that are both fair and lawful.
1. Do you actually need to make staff redundant?
For the purposes of this article, I’m going to assume you’ve already formally considered this question
and concluded that you need to reduce headcount in order to ensure the continued viability of the business.
Even so, it’s worth asking the question since businesses are often tempted to go straight for the ‘nuclear’ option of redundancy rather than consider whether there are other less terminal options for driving down costs.
A transparent and fair redundancy process means you must follow step-by-step guidelines agreed with the Advisory, Conciliation and Arbitration Society (ACAS) that demonstrate you have looked at all the possible options and are unable to achieve your business objectives in any other way.
These alternatives may include eliminating unnecessary cost from your business, considering flexible
working arrangements such as part-time working or job sharing, reducing overheads, early retirement or redeploying staff to other areas of the business.
2. What is redundancy?
Redundancy is the process of ending someone’s employment because their role in the business no longer
exists.
When an employee leaves a business through redundancy they will be entitled to a minimum period of notice
and, if they have been with the business for two years or more, a statutory amount of redundancy pay.
Redundancy can either be compulsory or voluntary (formally known as non-compulsory redundancy).
Voluntary redundancy is a severance agreement that is negotiated between the individual and the company
and there is therefore no formal process that needs to be followed since both sides have mutually agreed that the individual should leave their employment.
In the case of compulsory redundancy (or involuntary redundancy) there is an established process that
needs to be followed – not just to meet the requirements of employment law, but also to manage what is likely to be a traumatic process in a way that respects and is fair to the individual or individuals involved.
3. What is redundancy not?
There are those who see redundancy as an ‘easy’ way to remove someone who is no longer wanted. What
they quickly discover is that compulsory redundancy is not only far from easy, but also risks serious consequences if the process isn’t carried out in line with the ACAS framework.
The articles that follow in this series will deal in detail with the steps that form that framework, but
broadly speaking they are:
Running a redundancy consultation among all employees
Issuing ‘At risk of redundancy’ letters to all staff being considered for redundancy as a result of
the consultationUsing fair and consistent evaluation to reach a decision on who will be made redundant
Communicating that decision to the individual or individuals (note: if you are considering making 20 or more staff redundant there are additional actions you need to take, and these
will be outlined in this series of articles)Issuing a letter confirming redundancy to each person whose employment is to be terminated. This letter should be issued in line with the appropriate notice period for each individual. An employee’s minimum notice period is based on their length of service. The letter will also confirm any pay in lieu of notice and the statutory redundancy pay to which the employee is entitled.
4. Don’t be fooled by the waiting game
It’s not unheard of for businesses to try to use a redundancy process to get rid of employees who are
no longer wanted or whose faces no longer fit. As I’ve said earlier in this article, that is neither fair and transparent nor lawful.
It’s also not unheard of for businesses to make a role redundant with the intention of waiting a short time
and then reintroducing that job into the business.
At that point I would urge extreme caution. Quite apart from being a strategy that plays fast and loose
with the spirit of a framework that exists to protect employment rights, the redundancy-rehire approach also has the potential to see you end up in court.
One of the many myths of redundancy is the ‘six month rule’ which suggests that the redundancy clock is
magically reset. That isn’t the case.
In fact, there are no hard and fast rules around when you might be able to resurrect a role you have previously made redundant – just as there are no rules or laws to explicitly prevent you from rehiring someone immediately.
But if it can be proved you have misused a redundancy process to get rid of someone who’s underperforming
or whom you don’t ‘like’ in order to hire someone ‘better’, then there is a serious risk of becoming the subject of legal action.
If you’re considering making redundancies but aren’t sure of the best way to approach it, we’re on hand to
support you and your business through the process. Get in touch today for an informal, no-obligation chat.
