Announcing potential redundancies can be a disruptive and emotive process in any organisation, get it wrong and the whole business can feel demoralised. Preparation is critical to minimise the impact on employees and support the managers who will be undertaking the process.
Creating the plan
Gather a trusted group of senior managers to work out what the proposed changes are and what the implementation plan is going to look like. At this stage all the information needs to be kept very confidential. Leaks of information not only cause misinformation within the business, adding to the anxiety of employees but it can also compromise the consultation process which has legal implications. Consider restricting access to the relevant documents and be mindful of how its stored (not being left on open plan office printers nor on a shared drive).
Once announcements are made there is a very little time to build in the detail so this needs to be done upfront.
If the organisation recognises a trade union then you must follow the agreed consultation process.
If there is a staff council in place, consideration should be given to the communication of the organisations plans to the staff council.
Be as detailed as possible mapping out how many roles are going to be impacted, realistic time frames for consultation, including any need for pooling or interviewing employees in situations where there are more employees than roles available. Include logistics e.g. availability of private meeting rooms, locations for announcements, management travel if dealing with multi-site organisations.
Using the ACAS recommended redundancy plan structure, here are some points to consider that will help manage each stage of the redundancy planning process.
1. Avoid compulsory redundancies
Before any compulsory redundancy proposals are made can the organisation consider other ways of working to reduce costs.
Consider:
- Voluntary Redundancy scheme
- A temporary reduction of staff working hours
- Short term stopping of work
- Retraining of staff to undertaken new jobs within the business
- Reviewing the need for contract or temporary staff
- Reduction or stopping of overtime
- Hiring freeze – not hiring any new staff for a period as a cost saving measure
Some options might be more appropriate to the business than others.
It’s worth exploring each option and, if they aren’t appropriate documenting the business reasons as to why this is the case (being as factual as possible). This will be required for the consultation phase where employees may ask if alternatives to compulsory redundancies have been considered and and what action has been taken.
2. How to Consult with employees
What is an establishment?
It’s worth checking on the definition of ‘establishment’ to ensure there is an up to date interpretation as it can evolve following changes to employment case law. Currently, it is a local economic unit (e.g. a branch of a store or an office location). However, there has been legal argument that it’s the whole of the business regardless of location, legal advice might be necessary to ensure the appropriate level of consultation is carried out.
If fewer than 20 redundancies are being proposed (over a 90-day period in an establishment), there is no formal process required nor is there are specific time-frame. However, as best practice it’s recommended to adopt a three-stage approach to consulting with employees.
The three stages are:
- Announcing the proposed changes, and communicating to staff the roles that are at risk of redundancy
- Sharing information with the employees, and meeting with them individually to see if they have any counter proposals or ways to mitigate the need for redundancies (these might include the ideas outlined above)
- If no suitable alternative employment can be found then confirming their role as redundant and ending their employment.
If between 20-99 redundancies are being proposed then you need to collectively consult with either a trade union (if one is recognised by the organisation), staff council or elected representatives. The collective consultation meetings will explore alternatives to the redundancies, address any questions and agree any selection process that may be required. Once the collective consultation period is concluded then individual consultation meetings would commence as outlined above.
This consultation period must last 30 days before the first redundancy can be confirmed. If over 100 redundancies are being proposed, this consultation period will extend to 45 days before the first redundancy can be confirmed.
If it is proposed that more than 20 redundancies could occur, then the business needs to file an HR1 to the Redundancy Pay Services (part of the UK government).
3. Announcing the proposed changes to employees
This will be the first opportunity that employees are made aware of any potential changes in the business. It should be a presentation that clearly lays out the:
- current structure of the business
- new proposed structure of the business
- how that impacts the jobs within the business
- the reasons why change is needed
- timelines and processes involved
It’s important that all documentation uses terminology like ‘proposed’ as no decisions can be made on the final structure until consultation is completed. It’s also key to remember that it’s the role that is placed at risk of redundancy and not the person. Although it can feel personal to the employee.
Although senior managers may feel confident that this the right direction for the business this cannot be seen as a foregone conclusion. The proposals also may change during consultation as employees offer ideas or solutions that might not have been considered before.
4. Delivering the announcement
If applicable in multiple locations, then the announcement should be scripted and delivered simultaneously in the various locations to ensure that all employees receive the same message at the same time. Employees should be invited to a generic meeting (eg Company update) and do not need to receive information about the announcement beforehand.
Senior Managers involved in any part of the process should be confidentially briefed before the announcement and allowed to address any questions or concerns on the content in private. It is key that managers deliver a consistent and uniform message about the proposed changes, to avoid misunderstanding or inconsistency.
Making the announcement to those who work remotely or who are on leave of absence
Managers should arrange very soon after the main employee announcement to discuss the proposals over the phone with those who work remotely and who are on a leave of absence (maternity/paternity/parental/ long term sickness). They should also receive the same documentation and information as other employees.
5. Methods to select staff for redundancy
In situations where there are more employees than roles available then you will have to fairly assess and select who is going to be put at risk of redundancy. Note that last in first out (LIFO) is no longer a recognised as a fair way to select someone to be at risk of redundancy.
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Desktop assessment
This method allows managers to assess post holders on a variety of fair criteria relating to their skills and experiences directly linked to the requirements of the post. The job descriptions should be robust and if participating in a collective consultation process both the job description and the selection criteria should be shared and verified at the group meeting stage.
It is also recommended that more than one assessor/manager completes the assessment and either an HR professional or a more senior manager calibrates and challenges the results.. The employees have the right to view their scores and so assessors must be able to defend their decisions with factual evidence.
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Interview assessment
In situations where factual data may be limited, or the assessors feel they need more information they can complete a competence-based interview process as part of the assessment. The questions asked should fit the required skill set of the role. The outcome of the assessment should be communicated quickly especially to those who remain at risk of redundancy.
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Redeployment
For those who remain at risk of redundancy it is important to look for alternatively work within the business. It’s recommended to produce clear and consist lists of all available vacancies and prioritise interviews for those whose roles are at risk of redundancy. This list should be regularly maintained and updated to show what roles are still available.
6. Giving staff notice
It should be decided whether employees whose roles face being made redundant should work out their notice of its going to be paid in lieu (PILON).
PILON may be preferred, where employee morale is low, or there is no requirements for a handover of work.. However, it might be necessary for employees to work their notice to complete a project or piece of work. In these circumstances an additional payment might be considered as an incentive to stay for the duration of the notice period and complete the required work.
7. Working out redundancy pay
Employees with more than two year’s service will qualify for statutory redundancy pay. Age and length of service will factor into how much money they receive. The Government has a redundancy calculator online. If the organisation is considering enhanced redundancy payments, these can be offered by way of a settlement agreement, reducing the risk of an unfair dismissal claim.
8. Supporting staff and plan for the future
Will the business offer CV clinics or outplacement support for those employees facing redundancy? Does the business have any employee assistance programs (EAP) that can offer counselling and support to employees during this difficult time? Whilst its temping for managers to offer emotional support to employees in their team, it can be a difficult and draining process for the managers.
Key points to remember:
- Preparation is key
- Confidentially
- A proposed change
- It’s the role not the person
- Remember those who are on leave from the business (Maternity/Paternity)
- Make the selection process fair and transparent
Key documents:
- Robust business case
- Clear plan for consultation
- Announcement and business case for change
- Robust job descriptions
- Selection criteria
- Interview notes and ratings
- Redeployment list
For more advice on the redundancy process, from our team of HR consultants, you can find out about how to work with Bespoke HR here.