The Sunday Times - Business Doctor: Take steps to make redundancy fair

Peter Done: Managing Director and Founder

February 22 2016

PT Writes: I am in the unfortunate position where I may have to let a few members of my staff go, but I am unsure of how to approach this situation. In the case of redundancy, how do I decide which employees I make redundant? Establishing the reasons behind a redundancy exercise is vital to show that it is genuine and not simply masking another reason for dismissing employees. A business case should be prepared, outlining the current situation and the difficulties faced. This could be a need to save money, or because of changing work methods; a re-organisation of certain work functions or circumstances where the introduction of new technology has created a need to reduce the workforce. An important step in carrying out a fair redundancy process is to consider alternatives to redundancy before going ahead with the procedure. Where finances are the issue, are there any other measures you can implement which will have the effect of reducing cost but means people will not lose their jobs? Regardless of the reason for the redundancy or number of employees to be made redundant, tribunals expect a redundancy procedure to include a process of consultation. The consultation obligations on an employer vary dependent on the number of redundancies proposed but it should always be meaningful, so you should allow employees to have their say and seriously consider it. Group consultation should be done initially, by calling everyone together to explain the situation. This should be followed by individual consultation when you are nearing the end of the process and certain people have been earmarked as those to be made redundant. If you need to select some employees to be made redundant e.g. there are 10 employees performing the same or similar job and you need to lose 5 of them, then the selection criteria should be one of the subjects of the consultation. You should use objective criteria wherever possible; subjective criteria is very difficult to evidence if queried. You could use, for example, employees’ skills and qualifications, standards of work and disciplinary record should be used, and the lowest scoring employees will be chosen for redundancy. Criteria such as attendance or length of service can be used though this can, in some circumstances, be discriminatory. Once employees are selected, they should be given notice of redundancy and given the right to appeal the decision. Final considerations include ensuring the employees receive the correct termination monies, including statutory redundancy pay where legally required and accrued holiday pay etc.  

Suggested Resources