Redundancies done badly can cost dearly

Redundancy law is complex and getting it wrong can be very costly, particularly if you end up in an Employment Tribunal.

At the risk of stating the obvious, making people redundant isn’t pleasant. You need to consult with staff, consider measures other than redundancy, determine selection criteria and apply these fairly by consulting with the individuals affected - otherwise it could be deemed in a tribunal as being unfair and unreasonable. Communication with staff is a very important part of the process as there are legal requirements if more than 20 redundancies are involved and individual consultation is embedded in case law.

ProjectHR Ltd have recently helped a local company who didn’t realise that they had to follow the statutory dismissal procedure for what they saw as a straightforward redundancy. They genuinely ran out of work for two staff but they did not consult in line with the law. This resulted in them receiving a letter from a solicitor threatening them with legal action. At this stage the company called in ProjectHR Ltd for help. We were able to respond to the letter, resolve the lack of consultation issue and avert an automatically unfair dismissal finding in tribunal, which could have cost them several thousands of pounds, says John Stacey, Director.

In another case, a company called me in as a consultant to help them through the maze of issues. A manager was making employees redundant and was not aware of the special circumstances in making a pregnant woman redundant. He was about to make a serious error that would have resulted in a tribunal case. When we were interviewing the staff, a lady walked into the room and her condition became evident. I was able to steer the meeting carefully into the first step of consultation and afterwards agree a plan with the manager. The manager hadn’t realised that a woman on maternity leave has a right to be offered any suitable alternative position in preference to any other employee who is similarly affected by the redundancy.

Managers who call ProjectHR Ltd want expert advice. They want to make sure they follow the correct process, including all the myriad of people-issues that arise from these situations. Many are worried about what words to use, how to deal with questions and how to deal with employee anger or tears.

Looking an employee in the eye and breaking the bad news to them can certainly be a very daunting task for a manager. We support the employer with scripts, answers to questions, rehearsals and sit through telling the difficult news as well ensuring that the process goes through efficiently and as sensitively as possible.

Also, where funds allow, a company should always offer help to the redundant employee by way of CV’s and interview coaching as part of a package. A great deal can be achieved in 6 to 8 hours of coaching time and it doesn’t cost that much. It helps ease the process and gives a more positive feeling about the employer to those made redundant.

This can also be very well received by staff remaining in the organisation. They may have feelings of uncertainty about their own future and be hearing rumours and lose motivation, but at least they can see an employer who has been as fair as possible to their former workmates.

One Managing Director we recently worked with had to make part of his workforce redundant and did not know exactly how to go about it. It was such a difficult thing for him to break the news to people he had employed for many years. In addition, he knew of others who had ended up in tribunals. He had less than 100 staff and didn’t want or have the finances to employ a full-time HR person as the focus was to reduce cost not increase it. We were therefore able to offer specialist consultancy advice, without him having to bear a costly, ongoing overhead.

There is a growing trend for employers to use HR Consultants because of its cost effectiveness and you pay as and when required.

But, Companies need to be mindful not only to reduce cost but also look at areas where they can improve productivity or sales. With the right advice it is possible to do both at the same time.

This is a topical area of employment law.

Take advice from our leading expert at PROJECTHR LTD.

Note:
This webpage is designed to help visitors understand redundancies. It gives general guidance only and should not be regarded as a complete or authoritative statement of the law.