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How to Manage the Redundancy Process

The UK is still very much in a cost of living crisis. Unfortunately, due to businesses struggling and costs rapidly increasing, it is inevitable that many will need to make redundancies and reduce the size of their workforce, to survive these challenging times.

Make your business case

It is important to establish first of all that you have a genuine redundancy situation. Check the definition of redundancy and that this situation applies to you (see our article – Redundancies – initial considerations). Redundancies can occur where there is a business closure, where one site or department closes down, or where the workload may be the same (or even greater) but there is a reduced need for employees to do the particular work they do. Don’t forget that redundancy applies to the role, not to a particular person.

Consider whether you may achieve your desired aims without having to dismiss, eg through natural wastage; a ‘freeze’ on recruitment; or encouraging voluntary early retirement (but noting that you cannot enforce this, even if your employees are beyond State Pension Age); reducing the use of agency workers (but ensure that these have not been sufficiently integrated into your business to become your employees); reducing the use of contractors/sub-contractors; reducing or having a ban on overtime; temporarily seconding those at risk to other parts of your business; accepting requests for flexible working including job-sharing or reduced hours (on either a temporary or permanent basis) for those who are interested in this etc.

If none of these will achieve the desired results within your timescale and you are definitely contemplating redundancies or a restructuring which may lead to dismissals on the grounds of redundancy, you need to consider your business case very carefully. Why do you need to reduce numbers? What benefits will any reorganisation give you?

Tribunals will not expect you to demonstrate huge savings but will expect you to be able to defend the reason for the redundancies, so consider whether both they and your employees are likely to be convinced by it.

Plan, plan and plan!

As soon as your employees get wind that redundancies are possible, they will have lots of questions and will be concerned to get quick answers, many of which you will not be able to provide immediately. So do give consideration to those aspects that you can control. Ensure that everyone is told that “these are simply proposals” at this stage.

Consider your redundancy procedure. What precedents are there for process and payments? Are there any collective agreements in place? Has anyone transferred to you under TUPE and therefore may be on different terms? Don’t confine yourself purely to redundancy pay: look also at past practice on consultation periods, pay in lieu of notice, time off to attend interviews, retention bonuses etc.

Consider how many jobs you feel you could lose, or the level of savings you need to make and which jobs you can most easily do without.

Prepare briefing notes prior to any announcement

Bear in mind that your employees may be shocked or upset by hearing of redundancies and will not take in everything you say at meetings or briefings. So consider what information you can give to them to take away. Prepare a brief which outlines the procedures and update this as you go through the process.

You may wish to prepare a set of FAQs (frequently asked questions). Check that your answers are clear, simple and accurate. Over, rather than under, communicate.

Plan your general announcement

Planning the initial announcement to your employees is key to your success and there are plenty of examples of how NOT to do this (where employees hear second hand on the news or via email that their jobs are at risk!) Be sensitive to the likely survivors as well as to those at risk of redundancy and give careful consideration to the venue, timing and delivery of any group or individual announcements.

Depending on the numbers, it may be best to start by meeting with everyone potentially affected, presenting the background information and fully explaining the reasons for your proposals. Advise your employees that you are starting consulting and emphasise that no firm decisions have been taken yet. Advise them of the procedure and how you intend to consult with them (either through a representative structure or on an individual basis, or a mixture of both).

If you are contemplating multi-site redundancies, then plan how you will make a general announcement of the proposals to your workforce. Will you gather everyone together? (Do you have a suitable venue?) Or will you brief using other means, ie at each site with different managers giving the news simultaneously?

Get the timing right – you want everyone to hear directly, not through the grapevine. You also want to minimise disruption to day to day activities if possible – so it may be worth timing the announcement for the afternoon or just prior to the lunch break.

Calculate the redundancy payments

Once you know the employees at risk of redundancy you can calculate what redundancy payments they may be eligible to receive should their posts ultimately become redundant. You can give an indication of what redundancy pay they can expect as this can often help employees to decide whether they want to use the money to pursue other things or whether to consider alternative work with you, even if this is at a lower level of pay, status or benefits.

You can only give an indication during the consultation process as at this stage you should not have confirmed they are being made redundant (only being considered). Statutory redundancy pay is based on the employee’s age and length of service and his/her gross average wage (up to a statutory capped weekly amount) as at the date of termination (or, if notice is not worked, the date the statutory notice period would expire). Carefully check the length of service of any employees transferred to you under the TUPE Regulations as they will maintain continuity of service from their previous employer and may have different contractual terms from your other employees.

You may wish to consider paying more than the statutory minimum, in which case any redundancy payments are tax free up to the specified limit. Also do check your redundancy policy and/or contracts of employment to see whether they offer enhanced redundancy payments. Consider any precedents set by previous redundancies within your organisation and take advice as to whether these may form a custom and practice obligation.

Hold your dismissal meetings

Once the consultation process has been exhausted and has been undertaken for at least the legal minimum period of time given the numbers potentially involved, and you have considered all options available to avoid the redundancy and any suggestions put to you by the employee(s), you need to arrange dismissal meetings.

Write and invite each employee to a meeting with you to discuss the redundancy. Set out the reasons for the meeting in your letter. Allow the employee sufficient time to prepare for the meeting and to arrange a companion. You may wish to offer the employee the opportunity to be accompanied by a colleague or a trade union representative. Whilst this is no longer a legal requirement (following the repeal of the statutory dismissal procedures), it would still be considered best practice.

At the meeting, discuss the reasons for the dismissal and the options you have explored to try to avoid this. Allow the employee to have his or her say.

Consider any further points which may be raised but if you still have no alternative then inform the employee of your decision to dismiss him/her on the grounds of redundancy and write to him/her explaining why he/she is redundant and what the terms are (ensure that you show how any statutory redundancy pay has been calculated).

You may wish to offer the right of appeal. This is considered best practice, but there is no legal right of appeal for dismissals on grounds of redundancy.

Help to those who are leaving

The size of your business and the resources available may dictate what help you are able to offer to those who are leaving but you may wish to consider outplacement, contacting the local Jobcentre Plus or agencies to assist in job search, assisting with the preparation of CVs, giving some interview practice (particularly to those who have been in post for a long time and may not have applied for a job for many years), allowing the use of your computers, phones and copying facilities to assist with job applications, etc.

Consider those who remain

Very often, managers find that they are so focused on the people going that they neglect those who are remaining! If you are able to retain someone who was previously “at risk”, do write to confirm that they are no longer at risk.

Bear in mind that some of your remaining employees may feel insecure, concerned about more job losses, upset about friends leaving or even guilty – because they are staying and their colleagues are not. They may be more likely to suffer from stress and be concerned as to their futures. This is known as redundancy survivor syndrome.

Keep communications channels open, ensure that they know what is happening, provide reassurance where possible, and ensure that any employees who are taking on additional responsibilities as a result of the job losses are properly briefed, trained, and credited for this. Consider any retraining needs and remember that those taking on new tasks may require more help before they become fully effective. Ensure that managers have regular discussions with staff to ensure that they feel supported, especially those with new roles or new reporting structures.

Redundancy avoidance checklist

Our redundancy avoidance checklist document can be used to ensure that all options have been considered before proceeding with any redundancy process.

By ensuring that this stage has been completed you will reduce the risk of unfair dismissal claims and have evidence available to support any defence if a claim was to arise.

If you would like to download your free redundancy avoidance checklist, you can do so from our HR Document Shop, here.

We are here to help

If you would like further support with the redundancy process, or you are considering outsourcing your HR, Payroll, or Health & Safety, you can contact us on 0844 324 5840 or get in touch with us here.

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