How to Manage Redundancy - January 09
This article appeared in Fresh Business Thinking on 23 January 09
In these challenging times many businesses are being forced to consider redundancy as a means of ensuring their viability in the marketplace. The repercussions of getting the redundancy procedure wrong can be wide reaching, including the spectre of unfair dismissal claims as well as damaging loss of morale within the remaining workforce.
The aspect of the process that employers most often get wrong is the legal requirement to engage in fair consultation about the proposed redundancies.
For a redundancy dismissal to be fair, the employer must warn employees of the possibility of redundancy. The employer must then also consult individually with them before reaching any firm decision regarding their dismissal. A procedural failure does not automatically lead to a finding of unfair dismissal unless the minimum statutory dismissal procedures are not complied with. Nevertheless, an Employment Tribunal will look at all the circumstances to decide if the employer has acted reasonably in dismissing the employee.
Fair consultation usually means consultation whilst the proposals are still at a formative stage and requires adequate information to be provided to the employees on which they can respond. The employees also need to be provided with adequate time to respond. There should then be proper consideration of the points raised by the employees, rather than their responses being simply rejected or passed over.
The matters that should be discussed during the consultation process will depend on the specific circumstances but typically consultation should include consideration of alternatives to redundancy. Consultation will include the notification of the fact that the individual has been provisionally selected for redundancy, together with verification of the basis for selection and an opportunity for the employee to comment on their redundancy selection assessment. Consideration of any alternative employment positions should also be dealt with during the consultation period. The obligation to consider alternatives as part of the consultation process continues during the notice period.
The management time and risks involved should also be considered. The costs of redundancy go further than simply compensating those selected to go. Redundancy is an emotive issue so employers should prepare for the fact that remaining employees may suffer from low morale. Good communication is therefore essential. Timely and thorough communication, together with treating employees in a respectful manner, will maintain trust between the remaining employees and the employer. Line managers are a vital link between senior management and employees to ensure this trust remains. Training will therefore be vital to assist line managers with this role.
The importance of the line manager in the process extends back to before the redundancies were contemplated. Employees challenging a redundancy selection process often point to a discrepancy between the way they have been scored during the redundancy process and their last performance appraisal. Managers should therefore carry out a robust appraisal and interim appraisal process. This allows the employer to refer to objective evidence to justify any dismissals. Sound documentary evidence is a useful tool should you be required to explain your decisions to an Employment Tribunal
Simon Collingridge is an Employment Solicitor at Rickerbys LLP
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