Planning for Redundancies - Expert Comments

Just Employment Law
30th Jan 2009

Planning for Redundancies is the best way to ensure you keep the most valuable employees.

General employment law changes

The first stage of good redundancy planning might be to think about which particular skills and types of experience the business must retain to continue to be effective. This may, in turn, give a good idea as to what sort of selection criteria might be applied if compulsory redundancies are made.


The advent of age discrimination legislation is sounding the death knell for the traditional approach of ‘last in, first out’. Even amongst low-skilled workers, there is now a real danger that younger people made redundant this way will have been indirectly discriminated against. This is because they are too young to have built up sufficient service to avoid selection.


Selection criteria do not need to be particularly scientific, but they should always be as objective and measurable as possible. Therefore, if performance might be used as a selection criterion later on in the year, it is a good idea to make sure that all managers are up to date with appraisals of their employees. Equally, if it is intended to use timekeeping or attendance as a criterion, make sure that accurate records are being kept and normal absence management procedures are being applied consistently. With proper planning, it is normally possible to devise a fair basis for retaining the most productive and reliable people.


Of course, compulsory redundancies will normally be the last resort. Therefore, now might be a good time to think about which alternatives to redundancy your organisation could realistically implement should staff costs require to be reduced. In some businesses, cost savings might be achieved through voluntary redundancies, whilst in others, the need to retain certain skills or qualifications may mean there is rather less scope for volunteers.


More and more businesses are looking at short time working as a realistic alternative to redundancies. This will generally require the agreement of the employees involved (or the recognised trade union) but such agreement may be easier to obtain when the prospect of being made redundant then going out into the job market seems daunting. For many businesses, this alternative will help minimise the loss of skilled and experienced employees.


Often, out of a sincere wish not to see any of its staff lose their jobs unnecessarily, a business will wait until the last possible minute before declaring redundancies. The danger in this approach is that the consultation process then has to be rushed and that little time is available to consider any alternatives which might emerge from that process.


Employers should also bear in mind that when 20 or more redundancies are proposed at one establishment within 90 days, a collective consultation process must take place in tandem with individual consultations. Where 20-99 redundancies are proposed, the employer must allow 30 days to pass from the start of collective consultation before any dismissal can take effect. Where 100 or more redundancies are proposed, the relevant period is 90 days. The cost of paying wages during these mandatory consultation periods should be factored into any planning.


Indeed, the costing of a redundancy exercise is a critical part of the planning. Statutory redundancy payments, notice payments and payments in lieu of accrued holidays must also be factored in. Any other contractual benefits or enhanced redundancy terms will also be relevant.


The penalties for getting redundancies wrong can be particularly severe. In addition to any unfair dismissal claims employees might bring, a failure to collectively consult where required can lead to awards of 13 weeks’ pay (uncapped) per affected employee.


For all of these reasons, Just Employment Law is pleased to assist and support its clients from the earliest stages of redundancy planning, even where redundancy proposals are not imminent.


If you would appreciate some assistance with redundancy planning, please contact us and we will work with you to ensure that you are as well prepared as possible for whatever these turbulent times might bring.

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