Due to Coronavirus, many well established and successful businesses are facing difficult decisions around staffing, including redundancy measures.
There are various reasons for considering redundancy. Demand for products and services may have dropped due to the pandemic, or the shape of the work you have might have changed, meaning you need different skills in your workforce.
This is coming into sharp focus as we come into autumn, with the support from the furlough scheme tapering and ending on 31 October 2020. Calls are being made by Make UK, the CBI and unions for an extension to the scheme, but as yet none has been announced.
So far this year there has been a sevenfold increase in redundancies compared to corresponding data from 2019. Conscientious employers are well aware that making redundancies can impact productivity and morale of the whole business, as well as being very hard for the employees affected, particularly when the job market is depressed. So is there any good way to handle redundancies when it is a business necessity?
Tips for handling redundancy in an ethical way
Test carefully your reasons and financial modelling to ensure that it stacks up and is not just based on assumptions.
Look at all possible other options such as restricting recruitment, changing terms and conditions of employment, reducing agency use or temporary management pay reductions. Sharing the pain across the business will show you are ‘all in this together’.
A well planned process will ensure less uncertainty for managers and employees alike and reduce stress.
- Watch out for clashes with holiday dates and work into the plan time for extra discussions if needed;
- Think about what job opportunities you might have now and coming up and get job descriptions (including salary bands) prepared;
- Remember that if you have more than 20 persons that might be made redundant in a rolling 90 day period you will need to do collective consultation; and
- Take specialist legal advice to get this right.
Timing of redundancy
Where practicable keep people on furlough for as long as possible before making them redundant. This has to be balanced against the business advantage of making redundancies earlier, as notice can run while the employee is on furlough, which is a considerable financial support for employers.
Ensure that you clearly explain the why of what is happening and be honest about the difficult decisions the business is facing. Use video communications if face to face communications are not possible.
Before you start the process, you should have clear and detailed comms and FAQs in place for managers, affected employees and also the wider business, and keep people informed throughout.
Tone is very important: be honest, supportive and remember that no final decisions are made on who is likely to be made redundant until the end of the process, once all alternatives have been considered.
Fairness of procedure
Be consistent in how you treat people and transparent around how persons are selected. You can consult with employees who are on furlough about redundancy without it breaking the furlough rules.
Although inviting volunteers can be a good ethical practice, there can be issues with this so consider it carefully. What would you do if the person whose skills you really wanted to retain wanted to go? This can cause wider issues so define in which areas of the business you would potentially accept this and be clear on why.
Support for Employees
Make sure you give people the time they need to process this and ask questions. Arrange counselling, financial advice, outplacement support and be pro-active in helping your employees into new work.
Where possible, consider offering enhanced Redundancy Payments, although be aware that you may set a precedent for the future and that you need to do so in line with Statutory Redundancy Pay calculations or risk falling foul of age discrimination legislation.
There are legislative exemptions from the age discrimination rules for enhanced redundancy schemes that are similar to the statutory scheme. This means amending parts of that SRP calculation by either: removing or raising the statutory cap on a week’s pay; or increasing the appropriate amount allowed for each year of employment by multiplying it by a figure of more than one; or by increasing the overall figure by multiplying it by a figure of more than one, rather than (for example) just applying an ad hoc extra amount for everyone.
Support for you or your managers
It is an emotionally tough process: looking someone in the eyes and ending their employment and should not be underestimated. Give training and support to those persons and seek to reduce the ‘day job’ workload while they are managing this if possible.
Having the backing of an experienced legal team to support, guide you and keep you on track can also be invaluable. Our support packages are here. Our mission is to get the result you need and support you.
The way your organisation handles the process will make a big difference to how employees react and cope to being made redundant, the morale of those staying on and the success of the business going forward. For more top tips, you can watch our video on redundancy here.
To talk to our expert Employment team please get in touch.