Redundancies are a distressing reality facing many businesses in today’s difficult economic climate. At Perform HR, we can provide you with the guidance and support you need when redundancies seem unavoidable.
The cost-of-living crisis and surging energy prices continue to have a negative impact on businesses, with record numbers of employers looking for cost cutting measures over the next 12 months. The Office for National Statistics (ONS) showed redundancies climbing from 2.82 people per thousand each quarter, to 3.5, from January to December 2022, and 3.3 per thousand from November 2022 to January 2023.
According to the ONS, not only are redundancies on the rise, but the number of vacancies also fell by 51,000 to 1,124,000 during the December to February quarter. This reflects uncertainty across all industries as respondents cite economic and financial pressures as a factor in staffing and recruitment changes.
It’s not just you: times are hard. Maybe you find yourself right at the centre of these statistics, and redundancies have become a consideration for you and your business, after all redundancies are a tried and tested method for cutting costs and reducing headcount. But what must you do to manage your staff redundancies and do it in a legal and orderly way? The ACAS code of practice is the process you are legally obliged to follow to ensure that redundancies are carried out fairly and legally.
First thing to do is to check that redundancies are absolutely necessary. If you’re looking to lay-off an employee because of their conduct or behaviour, you will need to follow a disciplinary or capability procedure. Redundancies should be a last resort to reduce the size of your workforce due to the ceasing of the business, or the specific work type. There are also other options instead of redundancies that you may wish to explore, and we will look at these in more detail later on. If you have considered alternatives and keep coming back to redundancies, it is vitally important that you follow the correct procedures.
First you will need to check your redundancy policy or see if you have a collective agreement with a trade union, complete with details about what you must do. Redundancy legislation is complex, with both statute and case law determining employers’ obligations and employees’ rights. If you don’t follow correct procedures, you may be liable for unfair dismissal claims or protective awards.
You then need to make a redundancy plan which will cover all aspects of the process. ACAS states that the redundancy plan should cover the following:
- The steps you have taken and options you’ve considered before deciding on redundancies
- The number of redundancies
- How you intend to keep your staff informed at every stage of the process
- Details of consultations of all affected staff, including any off work on sick leave or maternity leave
- Your fair selection criteria
- Whether redundancy pay and notice periods are statutory or contractual
- Details of an appeals process for those who want to appeal the process or decision
The plan must follow a fair process, or you could be exposing yourself to legal repercussions. For example, you may need to employ the use of a ‘selection pool’, to ensure that employees are selected for redundancy in a fair way. You should have included selection criteria in your consultation. Criteria should be fair, measurable, and objective. You may want to score your employees on the standard of their work/performance, their skills or qualifications, their experience, or their disciplinary record. However, you must ensure that you do not select employees for redundancy based on their protected characteristics, (making someone redundant because of their age, sex, sexual orientation, marital status, disability, race, or religion), as this is unlawful under the Equality Act 2010.
Nobody likes making people redundant, and managing the process in a legally compliant way can be tricky. At Perform HR we can talk through the processes required and give you the right level of support you need to navigate the delicate redundancy process and leave you free to do what you do best, managing your business and offering.
Is there an alternative?
Of course, there are alternatives to redundancies. You may want to retain skilled and experienced staff and avoid the negative impact on morale that compulsory redundancies can result in. At Perform HR, we are experts at finding solutions to your HR issues, and one or more of these other measures may be all you need to get back on track:
A recruitment freeze: may give you some breathing space to recuperate lost finances, and may have a less negative effect on staff morale than redundancies.
Retraining and Redeployment: could be considered as an opportunity to offer staff alternative positions with appropriate retraining. Talk to Perform HR about how to make the offer to retrain and redeploy as part of an offer for alternative employment.
Reducing or eliminating overtime: You may feel that there is no current requirement for overtime, but you will need to consider whether there is a contractual entitlement for your workforce. Perform HR can help you navigate reducing overtime as a cost saving measure.
Reduction of hours/Temporary lay-offs: You may want to reduce costs by reducing hours worked or number of days worked. But bear in mind, any changes to terms of employment must be done with explicit consent of the employee, as any breach of contract could lead to claims for constructive unfair dismissal. Speak to our experts at Perform HR to explore this option.
Voluntary redundancy: may feel like some control is being taken away, but it is ultimately your decision whether or not to grant an application for voluntary redundancy. Ultimately offering a voluntary redundancy package may reduce the need for compulsory redundancies.
Get in touch with us at Perform HR and see what we can do to support your business. There are services and packages to meet all your HR needs.