Redundancy mistakes you need to avoid

  • Redundancy
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Peninsula Group, HR and Health & Safety Experts

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Redundancy is a complex process.

Along with being emotionally tough, there are steps you need to take to avoid risk. Without following specific ACAS rules, you could leave your business vulnerable to tribunal claims.

So, if you need to make tough decisions about your workforce, make sure you avoid these pitfalls…

Avoiding the consultation process

By law, you need to ‘consult’ with staff who are at risk of redundancy. This involves:

  • Explaining why you’re considering redundancies
  • Listening to any alternatives or ideas your employees suggest

If you skip this stage, staff could claim for unfair dismissal. And if you’re making over 20 redundancies within a 90-day period, you need to follow ‘collective’ consultation rules.

This means you need to:

  • notify the Redundancy Payments Service (RPS) before the consultation
  • invite a representative to the consultation, like a trade union rep or an elected employee rep
  • share information with representatives and giving them enough time to consider them 
  • give staff termination notices with their leaving date
  • issue redundancy notices once the consultation is complete

To avoid penalties, it’s essential you follow these steps. For example, not notifying the RPS could land you an unlimited fine.

Not listening to suggestions from staff

When you speak to your at-risk staff, it’s important to take their feedback onboard.

Not only is this part of a fair redundancy process, but it could help you explore potential ways to save costs and keep staff onboard.

For example, employees might already want to adjust their role –  like moving to part-time work or a new department. This might help you avoid redundancies, whilst improving your employee’s work-life balance or job satisfaction.

If your worker suggests something unfeasible, make sure you have a fair reason to refuse the request. For example, it might not be financially possible.

Not considering all other alternatives

For a redundancy to be ‘fair,’ it needs to be your last resort.

That means ruling out any and all alternatives, including:

  • Redeploying and/or retraining employees
  • Job shares
  • Flexible shifts
  • Recruitment freezes 
  • Overtime freezes 
  • Voluntary career breaks or redundancy
  • Early retirement

So, carefully consider whether any of these options could help you avoid making a redundancy. If so, you’ll need to pursue them – or risk breaching employment law.

Forgetting to ask for volunteers for redundancy

It can feel safe to assume all staff would rather avoid redundancy.

However, voluntary redundancy could be a tempting prospect for some employees. Whether they’re nearly at retirement age or want to take a career break, they might want to volunteer.

This means you’ll avoid upsetting staff with an unwanted redundancy. So, reach out to your workers and outline the financial package you’re offering.

Remember, you can’t reach out to staff for voluntary redundancy by their personal characteristics – for example, if they’re near retirement age. This would count as age discrimination.

Failing to calculate redundancy pay correctly

If an employee has worked for you for two years or more, they’re entitled to a statutory redundancy pay-out.

The amount they receive will depend on:

  • Their age
  • Their length of service
  • Their weekly wage

If you offer the wrong amount, staff could accuse you of unfair dismissal – even if you miscalculate by accident.

Plus, if your employee has worked for your business for two years or more, you’ll need provide the right notice period and leave.

Not applying fair selection criteria

You might think it makes sense to make older staff redundant. Or alternatively, you might assume it’s safer to make your part-time workers redundant.

But actually, these factors may count against you in a tribunal. For example, your employee might work part-time due to a disability. So, this would count as indirect discrimination – and a breach of part-time worker regulations.

Instead, you’ll need to select staff for redundancy using fair ‘selection pools.’  This means sorting staff into groups defined by their work or skills. These traits should be facts you can measure, and not based on personal opinion.

Examples of fair selection pools include:

  • standard of work or performance
  • skills, qualifications, or experience
  • attendance, which must be accurate and not include absences relating to disability, pregnancy, or maternity
  • disciplinary record

Nobody wants to make redundancies…

And with Peninsula Face2Face, you don’t need to.

With our Face2Face service, a HR consultant will take the risk, stress, and emotion out of your complex HR procedures. They’ll visit your workforce to carry out your toughest conversations and processes – instead of you.

Then, you’ll receive legally-watertight paperwork to back up your decision and keep you risk-free.

To learn more, book your free consultation here.

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