The redundancy process is complicated. There’s a lot to think about both before you get started and throughout the entire process. We’ve dealt with many redundancy situations and there are some common mistakes that we’ve seen clients make (clearly before involving us!) In this post we’ll share some of the areas to be particularly mindful of when conducting a redundancy process.
This blog post does assume that you have a certain level of knowledge about the redundancy process, the terminology that relates to a redundancy process and the circumstances in which it may be appropriate. If you are new to redundancy then we’d suggest you read our guide to redundancy as a starting point. This guide will talk you through the whole process and help you become familiar with the different elements of redundancy.
So, here are the 5 most common redundancy mistakes and how to avoid them:
1. Insufficient Planning for the Redundancy Process
It can be very tempting to rush to action when you think you need to make redundancies. It could be that there are significant financial pressures on the business and there’s a need to act quickly. Alternatively, it could simply be that you are uncomfortable knowing what is about to happen and want to get the news into the open as soon as possible.
We’d encourage you not to jump to action before you’ve done sufficient planning.
To ensure sufficient planning, the key things that you should make sure you’ve considered are:
- Individual contracts – There’s a lot to think about both before you get started and throughout the entire process.. Some of the biggest challenges come from launching a redundancy process based on a set of assumptions about start dates, notice periods and job roles only to immediately hit push back from employees when very basic data is incorrect. Take time to go through each employee in turn to try to avoid surprises.
- Holiday periods and other absence – if you’re launching a redundancy process then you’ll want to open consultation when the people you are consulting with are actually working! This may not be possible if the process will involve a lot of people. However, you should certainly consider how you will deal with those people who are not around. If people are on periods of long term sickness absence or family leave then it is absolutely vital that you find a way to communicate with them in a timely manner.
- Contingency plans – whilst you hope everyone will behave professionally and continue working whilst you conduct consultation, you should be prepared for people to be less productive and even absent during the process.
With sufficient planning of the redundancy process, it should reduce the risk of things getting off to a bad start.
2. Insufficient Consideration to Who is At Risk of Redundancy
The selection ‘pool’ for redundancy may not always be as clear as it first looks.
For example, you might clearly see a team of administrators who support an area of the business as redundant. However, should the redundancy selection pool also include administrators from across the business who do the same kind of work?
It’s very important that you give full consideration to which employees are impacted by your proposal. Then you need to think widely around which employees should be in the pool. We have written a post that gives a lot more information on redundancy pooling.
3. Rushing Employee Consultation
Employee consultation is a vital element of a fair redundancy process. However, it’s not always easy to navigate.
Employees can be very emotional and employers can want to minimise the amount of interaction they have with them. Employers can also find it quite difficult to explain to employees why the alternatives they are presenting are not viable for the business.
Consultation can also be quite time consuming.
With all of these things making consultation difficult, it can be very easy to want to rush this process. This is a mistake.
Effective consultation can go a very long way to helping employees to understand and accept the need for redundancy.
Giving employees information, allowing them the opportunity to ask questions and feel like they are being listened to goes a long way to helping them accept the outcome if redundancy does end up being necessary. They may not like the outcome but they will at least understand it.
That aside, you are required by law to conduct a meaningful consultation. Failing to do so will most likely lead to a finding of unfair dismissal if an employee does challenge the outcome through an employment tribunal.
4. Unfair or Disadvantageous Selection for Redundancy
If you need to make a decision around which employees from your pool leave the organisation and which stay, then you need to undertake selection.
There are different ways that you can do this but, whichever approach you pick, it must be fair.
It could be that your selection process is to invite employees in the selection pool to attend an interview. To make this fair, you need to ensure that no one in the pool is disadvantaged by the process. Perhaps there’s been issues in the past between an employee and the individual who would undertake the interview. Or maybe you have people who are off sick and unable to participate in an interview process. These types of issue would make your selection process unfair.
An alternative to using an interview for selection would be to use a selection criteria and undertake a scoring process. Again, you need to ensure your selection criteria are fair. You’ll need to ensure that the individuals who will be undertaking scoring will be unbiased in their approach.
5. Inappropriate Use of the Redundancy Process
This maybe should have been the first point. The biggest mistake an employer can make is to use redundancy in a situation that is not redundancy.
We have lost count of the number of conversations that have started with “X is really not performing very well. They are being really difficult so, we’ve thought about it and we’d like to make them redundant”.
Redundancy is not an easy way to fix a performance problem. Redundancy is complicated and has a strict legal definition. If the situation that you are trying to manage is not redundancy then don’t try to dress it up as redundancy.
There’s a lot to take into consideration in any redundancy situation and if you’re considering making redundancies and would like to talk to an expert, please do give us a call on 020 3319 1649 or drop us an email using our contact form.
Manager’s Guide to Redundancies
Read our comprehensive guide to redundancies providing overview of redundancy requirements for UK employers and detailed insights into key activities and decisions.