All businesses have to cope with change. Sometime changes require reducing, or even stopping, a particular activity. This could be to reduce costs, improve efficiency or productivity by reducing investment in declining areas or to consolidate after an organisation change. As a result, you may need to make some redundancies in your workforce.
It is very important that you handle redundancies properly. If you don’t follow the correct redundancy procedure, you might be exposed to an unfair dismissal claim.
We can help you plan and implement redundancies in your business. We have a lot of experience handling redundancies in both SME’s and large corporate environments.
The general principles of a fair redundancy process are:
1. Ensure that any employees at risk are informed and consulted
2. Explore all reasonable alternatives to redundancy
3. Use a fair selection process to identify who should be made redundant
4. Support the employee through the redundancy process
5. Provide selected employees with the right of appeal
The amount of time you need to spend consulting with employees depends upon how many are impacted. If you have trade unions or employee representatives, you may also need to consult with them.
With individual employees that you have notified as at risk, you need to support them through the process. This means looking at suitable alternative roles within the business, if there are any available. You can also considering job sharing or flexible working options (if any) and address any questions the employee has. The intent is to ensure that every effort has been made to avoid the redundancy.
In consultations with representative groups and unions, you will need to cover both the business reasons for the redundancies and your proposed consultation process. You will probably be asked what you’ve done to avoid redundancies.
Selecting employees for redundancy
Where you are reducing the number of employees performing a similar function, you will need to define some selection criteria. You must run a fair selection process. Therefore, you should choose these criteria carefully. In most cases, you use the selection criteria to stack rank the employees in the selection group. You then work up from the bottom until the required target is reached.
You must give statutory redundancy pay (SRP) to employees with more than two years’ service. This equates to one week’s gross pay for every full year of service. SRP is paid free of income tax and national insurance. You may also decide to make a discretionary additional payment, known as enhanced redundancy pay. If so, any enhanced redundancy pay is also free from tax and national insurance up to a limit of £30,000.
The employee will also be entitled to pay in lieu of notice and for any accrued annual leave that hasn’t been taken.
We can help you manage this process
This is, of course, just an overview. We can help you plan and implement a redundancy and restructuring program. We can advise and assist with consultations, redundancy pay and selection processes. Contact us to discuss your requirements!
If you would like assistance with redundancies, please contact us today.