Unfortunately, as the furlough scheme tapers, more and more businesses are announcing redundancies. The job market for redundant employees is tough, resulting in employees more likely to challenge the fairness of the process they have been through. As an employer, how can you minimise the risks?
Fiona Sinclair, HR Consultant at Darwin Gray, guides us through the key steps in a fair redundancy process:
- Establish the rationale for the proposed redundancies – being clear on this means that you can clearly evidence the need for redundancies, the roles that are affected, the numbers of people affected and when you want redundancies to take effect.
- Decide on numbers involved – if making more than 20 redundancies within a 90-day period, collective consultation rules apply: electing and then consulting via employee representatives for at least 30 days (45 days if more than 100 redundancies) before the first redundancy dismissal.
- Determine if there are any vacancies available, and if so, whether they are suitable alternative employment (for which the at-risk staff have first refusal) or alternative employment (for which the at-risk staff can apply alongside other applicants).
- Define the redundancy pools from which redundancies are to be made – you may be making an entire pool redundant e.g. a layer of management or a group responsible for delivering a service that will no longer exist such that there is no need to go through a selection process, or using objective selection criteria to select a number of people from a pool.
- Determine whether you have any employees who are pregnant, on maternity / adoption or shared parental leave as special rules apply to them to protect them.
- Establish a proposed set of objective selection criteria – wherever possible these should be fact-based. They must not be discriminatory (for example absences related to a disability should not be counted). Consider weighting certain key criteria.
- Decide whether or not to offer an enhanced redundancy package for volunteers e.g. remove the cap on a week’s pay and/or apply a multiplier for redundancy pay purposes, or allow them to be paid in lieu of their notice period. Consider indicating to those who volunteer that redundancy is not guaranteed – there may be business reasons for refusing applications e.g. loss of essential skills / experience, cost of redundancy payments.
- Consult with affected staff about the proposed redundancies, the rationale, the proposed selection criteria and ideas they may have to avoid the need for redundancies. Consider carefully any suggestions put forward and respond to each of them in writing.
- Employers are strongly advised to keep a written note of all meetings with affected staff, including questions and answers during the consultation period.
- If selection is necessary, apply selection criteria. Wherever possible at least 2 managers should score each person to help ensure objectivity. Keep notes on the justification for each score given. In a 1:1 meeting, issue affected staff with their own scores and give them the opportunity to challenge those; only once that has happened confirm who has been selected for redundancy and invite them to a formal redundancy meeting.
- Hold a formal redundancy meeting with each selected employee, giving the employee at least 48 hours’ notice and the right of representation. Confirm the outcome in writing, including details of how the redundancy pay has been calculated and setting out the appeal process.
- Discuss practical arrangements in terms of:
- Notice – are they required to work it, be paid in lieu of it, be placed on garden leave, take accrued holidays during it? Don’t forget if they are on furlough, the notice period must be paid at 100%.
- Return of company property, including company vehicles, mobile phone etc.
- Entitlement to reasonable time off to arrange training for a new job, or register with recruitment agencies, or attend interviews.
- Signpost to support for redundant employees e.g. the Welsh Government’s ReAct programme.
- When to expect notice pay and redundancy pay and who to direct reference requests to.
In summary, a fair and reasonable redundancy process is one where employers approach the process with clarity and sensitivity. The business reasons are clear, the methods for selecting those to be made redundant can be clearly justified and employees are taken on a journey during which they have every opportunity to influence, challenge (and receive clear responses to) the process before any final decisions are made.