How to Stay Compliant and Compassionate when Managing Redundancies

Managing redundancies is one of the most challenging tasks for any employer. Balancing compliance with UK employment law and demonstrating compassion towards affected employees is not only important from a legal point of view but also from a moral perspective. At RDC Solicitors, we’re experts in guiding employers through this complex process, ensuring they uphold their legal responsibilities while maintaining a fair and empathetic approach.

Understanding Redundancy

When an employer needs to reduce their workforce due to business closure, changes in operational needs, or cost-saving measures, redundancies occur. It’s really important to distinguish redundancy from other forms of dismissal to avoid unfair dismissal claims. For a redundancy process to be fair, it must meet the criteria set out in the Employment Rights Act 1996 and follow the guidance provided by the Advisory, Conciliation, and Arbitration Service (ACAS).

Step 1: Plan and Prepare

Before initiating any redundancy proceedings, employers must carefully plan and prepare. Start by evaluating whether redundancies are necessary or if alternative measures such as reduced hours, redeployment, or voluntary redundancies could achieve the same outcome.

Remember that employers must establish a legitimate business reason for redundancies and failing to provide clear justification can result in claims of unfair dismissal.

Step 2: Ensure a Transparent Selection Process

Once redundancies are deemed necessary, employers must develop a transparent selection process to determine which employees may be affected. Criteria for selection should be objective, fair, and measurable. Common criteria include assessing employees' skills and qualifications, performance and productivity, attendance records and length of service.

Avoid discriminatory criteria, as this could lead to claims under the Equality Act 2010. For example, selecting employees based on age, gender, disability, or other protected characteristics is unlawful.

Step 3: Consult Employees

Consultation is a legal requirement in redundancy situations. However, the scope of consultation depends on the number of employees affected. For example, for businesses with fewer than 20 employees, employers are required to hold individual consultations. For businesses with 20 or more employees, collective consultation within 90 days is required, involving employee representatives or trade unions.

During consultations, employers must explain the reasons for redundancies, the selection process, and any alternative options. Employees should also have an opportunity to provide feedback and suggest alternatives. An important point to note is that failure to consult employees adequately can result in legal action or compensation claims.

Step 4: Provide Adequate Notice

Employers must provide employees with appropriate notice periods based on their length of service. For employees with one month to two years of service, one week is required. For employees with two years or more of service, one week for each year of service (up to 12 weeks) is required. In addition, employees with at least two years of service are entitled to statutory redundancy pay. Employers should also check contractual entitlements, as some employment contracts may offer enhanced redundancy terms and enhanced notice period.

An important tip for staying compliant during redundancies is to ensure that notice periods and redundancy pay are calculated accurately. Any errors can result in legal claims and erode trust.

Step 5: Offer Support and Assistance

Understandably, redundancy can be a traumatic experience for employees. Offering support demonstrates compassion and can help preserve your company’s reputation during this difficult period. It may be worth considering providing services such as career counselling and CV writing workshops, in addition to emotional support through employee assistance programs or counselling services.

When delivering the news, one-on-one meetings are generally preferable, allowing not only privacy but the time and space to discuss the next steps in a compassionate way.

Step 6: Documentation

Thorough documentation is crucial to demonstrate compliance and protect against potential future claims. In fact, in the event of a tribunal claim, comprehensive documentation can provide vital evidence to support your case. It is, therefore, important to maintain detailed records of the business rationale for redundancies, consultation meetings and outcomes, selection criteria and scoring, and notices and redundancy pay calculations.

Step 7: Consider Remaining Staff

Redundancies not only affect those who leave but will most likely have a significant impact on remaining employees too. Poorly managed redundancies often lead to decreased morale, increased stress, and lower productivity. Communicating openly with your remaining staff, explaining the reasons for redundancies, and your future plans, is key. As is encouraging open dialogue and providing reassurance about job security and support measures for remaining employees.

Seek Legal Advice Early

Redundancy is a complex process with significant legal and emotional implications. But seeking early legal advice ensures that you comply with all relevant laws and regulations while maintaining a fair and compassionate approach. At RDC Solicitors, we provide tailored advice to employers, helping them navigate redundancy challenges with confidence and care. For support and advice on redundancies, please call us on Bingley 01274 723858, Ilkley 01943 601173 or Bradford 01274 735511.