Nowadays, given the current economic climate, redundancies are a common issue for many organisations. In this week’s blog post we discuss how managers need to handle redundancies delicately and follow the proper procedures. Doing this can transform a possibly stressful scenario for both the manager and the employee into a positive one, where the employee can move on quickly and find new employment, and is able to leave the organisation feeling respected and on good terms with the organisation.
What is redundancy?
Redundancy is when an employee’s position is no longer required by an employer due to restructuring or operational changes in the organisation.
For example, it occurs when:
– An employer decides they no longer want an employee’s job to be done by anyone and terminates their employment (diminishing the need for employees to carry out work of a particular kind)
– The organisation ceases to operate and closes down (it becomes insolvent or bankrupt)
– The organisation has more employees than it needs or can afford to pay
Employers must make sure that when they terminate an employee’s contract by reason of redundancy that is a ‘genuine redundancy’.
The following constitute scenarios that were not genuine and lead to complaints and cases from employees:
Dismissing when there was not a genuine redundancy at all
Failing to follow a fair procedure leading to the dismissal
Selecting employees to be made redundant subjectively rather than using objective criteria
Who is made redundant?
Carrying out a proper selection process is crucial if unfair dismissals are to be avoided.
Commonly used selection criteria
Last in, first out (LIFO): Using length of service as a selection criterion is not looked upon favourably. This is because it is potentially discriminatory against younger employees who are more likely than older employees to have shorter service.
Skills and knowledge: It is reasonable for managers to take employees’ skills, experience, performance and knowledge into account in a selection exercise. Managers should ensure that such skills are assessed objectively and should avoid difficult to measure tests such as employee “attitude”.
Attendance: While line managers can use employees’ attendance records as a criterion for selection, they need to consider the period over which attendance is reviewed and the reasons for absence (for example reasons for absence such as pregnancy shouldn’t be counted).
Discriminatory Selection Criteria: If an employer’s selection criterion discriminates on the grounds of race, sex, disability, marital status, religion or belief, sexual orientation or age, the employer will potentially face discrimination claims as well as claims for unfair dismissal. A dismissal is automatically unfair if the employee has been selected for an inadmissible reason (for example, because the employee is pregnant).
The list of criteria should be drawn up to reflect the employer’s business priorities in order to retain the best employees.
Tips to handle redundancies:
Review whether redundancies can be avoided from the start. Discuss and give serious consideration to any suggestions made by employees that you may not have considered – e.g. early retirement; not renewing contractors’ contracts; freeze on overtime; bans on recruitment; flexitime; terminating agency temps etc.
Make sure those that are being made redundant are told in private (also given notice in writing) and are fully briefed on their entitlements, as well as any support services the company will be offering them to help them move forward. Remember, the affected individuals are likely to be ill equipped for positioning themselves in the job market and often feel confused, isolated, angry and afraid.
Furthermore, make sure those employees who will retain their jobs are aware of what is going on, and how it may affect them (for example organisational/departmental restructures). Those who were made redundant aren’t the only ones who are impacted. Remaining employees will also be faced with “survivor shock” and may ask themselves, ‘will I be next?’. It is important that managers reassure survivors and demonstrate that those who have left have been provided with as much support as possible.
In instances where a number of people lose their positions through redundancies, feelings of doubt, suspicion and lack of confidence can spread throughout the organisation. To minimise “survivor shock” you will need to schedule meetings with them as soon as possible after you have delivered the cutbacks.
KEEP IT LEGAL
Make sure employees are receiving their full entitlements – ensure you have satisfied every contractual obligation you may have. It may help you to obtain formal legal and financial advice before deciding on redundancies. Be aware that your decision to make an employee redundant means you will have to provide a valid reason for the decision and you will be unable to re-fill the position if circumstances change for a reasonable period of time.