Redundancy Rights
There may come a time when you have to consider redundancies. Redundancy law and redundancy rights must be adhered to in order to avoid claims for unfair dismissal or discrimination. It might be difficult for managers who have to bear the news, but it is a lot more difficult for the people who may be losing their jobs. Be caring and compassionate, treat people with respect.
Employment redundancy should only be considered when no short term options are believed to be viable. Short term options could include reducing the hours in the working week, transferring skills or early retirement. As soon as employment redundancy is being considered the employees affected should be warned as part of the redundancy procedure followed by redundancy consultation. Employees may wish to seek redundancy advice. Our Redundancy HR Documents cans assist you and ensure your process is correct.
As a minimum, all employers are advised to establish a formal redundancy policy as this will help to ensure that employees are aware before redundancies occur of the procedure to be followed.
- Communication is key in the redundancy procedure
- Agree a selection criteria which is objective, fair and consistent and that will satisfy redundancy law and redundancy rights.
- Identify any departments which are not affected by the redundancy criteria and allay unjustified fears
- Establish an appeals procedure and inform people about it
In the interest of good employment relations it is prudent to consult with all individuals affected, regardless of numbers, as this will reduce the possibility of conflict and misunderstanding.
Where an employer fails in any way to comply with current redundancy law, redundancy rights and the redundancy procedure, a complaint may be made to an Employment Tribunal. If you are unsure take redundancy advice from experienced HR Managers.
Alternatives to Redundancy
The overall cost with redundancies is far more than just the initial redundancy pay an employee receives. You will need to add costs for recruitment when you require staff again and the cost of training new recruits to have them reach the development stage your redundant staff were at prior to being made redundant. How do you put a price on this?
Then there are the negatives that come from any business announcing redundancies which include low morale within the workforce which inevitably reduces production, performance and service. Good quality staff can leave for alternative employment due to the uncertainty which may happen after you have reduced to the number of staff you felt appropriate as they have been offered employment from employers that interviewed them during the redundancy process. What cost does this then have?
Two alternatives to redundancy that can reduce all the associated costs that go with it are:
- Salary reductions - By way of consultation and agreement you and your employees may find reducing existing salaries for an agreed period of time a more benficial solution to a short or medium term problem. If for example you need a reduction in employment costs of £100,000 per annum and you have 50 employees that equates to a £2000 per annum reduction per employee on average. You may choose to have a sliding scale or a percenatge of salary for the reduction. Your employees may feel much more comfortable with this solution.
- Reducing hours - Again through consultation and with agreement reducing the hours per week could also be a better solution than redundancy for all parties. It would also steer you as an employer away from all the associated costs that go with redundancy. If we take the same 50 employee example with an average hourly rate of £10 and a working week of 37.5 hours, then reduce it by 7.5 hours per week equivalent to £75 per week per employee the saving over the same one year period equates to £195,000
Both alternatives also give a saving in employers NI in addition to the amounts given in the examples.
The team at Connect HR & Recruitment can project manage your redundancies, assist and advise or simply provide you with the relevant documentation to minimise your risk. Redundancy HR Documents CLICK HERE
