How do you deal with redundancies? Here’s our guide...
The starting point for a redundancy procedure
should always be a written business case. This does not need to be overly complicated, but you should consider exactly what has brought about the need to make redundancies.
- Are you experiencing difficult trading conditions? Have lost contracts to competitors?
- Are people making do with their older faulty possessions rather than getting them fixed?
It is also best to include the result that this has had in terms of incoming work and cash flow.
Are there other options available?
You should look for any alternative measures that you could take to avoid making people redundant. This could be, for example, looking for different suppliers who can offer products at a cheaper rate; increasing prices for products and services etc.
What if redundancies are unavoidable?
If redundancies cannot be avoided, it is vital that you keep your staff informed as to the current situation, and allow them to make any suggestions on other ways redundancies could be avoided. Formal group meetings are the best way to start, followed by individual meetings later on. It’s important to listen to your staff and take their suggestions seriously.
Who should go?
Choosing which employees to make redundant can be a tricky job, especially in a small business. You will need to come up with some objective criteria to mark your employees against, and those that score lowest are the ones to be made redundant. It is best to agree with your staff which criteria to use, and all scoring should be recorded in writing so that you can show it to your employees.
What about redundancy pay?
Employees with at least 2 years’ service are entitled to receive statutory redundancy pay which is calculated according to a set formula, involving the length of service and pay up to a certain limit. Once you have decided which employees are to be made redundant, you must give them a statement which sets out how their redundancy pay is calculated. Both pay and this statement are legal requirements and so you should ensure that they are given to qualifying employees.
Redundancy procedures can, even in small businesses, become complicated. Making someone redundant means dismissing them and therefore, fair procedures are expected. Getting it right means that you can emerge leaner and more efficient from your difficult times.
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