Setting up a redundancy procedure

In the same way that making a will can be seen as tempting fate, so too, for many employers, can setting up a redundancy procedure be seen as tempting problems in the work place. However, this is not a prudent approach to take and, from an employment relations perspective, employers would be well advised to give serious thought to putting procedures in place well before the need for them ever arises. But what should such procedures contain and how should they operate in practice?

The need for a redundancy procedure

All employers should give serious consideration to putting in place procedures for dealing with redundancy. Not only will it help management to deal effectively and more efficiently with the redundancy when it arises, but also it it will give the staff added reassurance that as and when such a situation arises it will be dealt with in a fair and controlled manner. Naturally not all businesses will need to put in place procedures of the same complexity - it will depend largely upon the size of the business and the complexity of its systems - but nevertheless, having an idea of how things will be dealt with, even if each redundancy happens on a more or less ad hoc basis, will assist everyone as and when the need arises.

Thus, for those with management responsibility having a redundancy procedure will ensure there are agreed, prepared and, hopefully, understood procedures both for avoiding or minimising
redundancies as well as for dealing with redundancies as and when they arise. In effect it, whilst not acting as a guarantee that conflicts and misunderstanding will not arise during the process, nevertheless it will reduce considerably the likelihood of
them arising as and when the redundancies are communicated to staff. From the employees’ perspectives, it will give them the reassurance of knowing that representatives or their trade unions know the procedures involved and can negotiate more effectively on their behalf and that they are likely to be treated fairly as and when such a need arises.

Whilst the impetus for setting up a redundancy procedure is likely to come from the employer, this should not mean that employees and their representatives are excluded from the process and management should take special care to ensure that employees, their representatives and, where relevant, trade unions are consulted about the proposals. Often, the best time to draw up procedures to apply should there be a redundancy is when none are envisaged. Not only will this ensure that consideration is given to more general issues rather than specific concerns, but also it is less likely to be seen as a ploy by management to reduce the cost of the redundancies. Employers should, if they are choosing such a time, make it very clear to their workforce that no redundancies are planned at that time otherwise the rumour mill is likely to lead to numerous potentially misleading misunderstandings.

Promoting the redundancy procedure

Having drawn up the redundancy policy, the employer should then take appropriate steps to make it known. It is not enough that the policy is drawn up and left to languish with the HR department until the fateful day when it is needed. It should be made available to employees - either in the staff handbook or the on the business’ intranet - and all employees should have explained to them what it will mean and how it might affect them.

In addition it should be reviewed and, where appropriate, updated, to ensure that it continues to be relevant and addresses the actual and ongoing needs of the business. Both staff and their representatives should be involved in this process wherever possible.

What should the procedure contain?

The contents of the redundancy procedure will depend upon the size and complexity of the business. In some cases it may be sufficient for the procedure to be almost ad hoc - perhaps setting out the basis upon which redundancy will arise and containing an assurance that the appropriate legislative safeguards will be observed at all times. However, in the majority of cases something a little more formal would be advisable.

Most redundancy procedures should begin with a general statement about the businesses commitment to avoiding redundancies wherever possible and to ensuring the job security of everyone involved. Clearly the fact of the existence of the policy indicates that this will not always be possible, so the statement should ensure that it is realistic and should not contain promises that the management cannot keep. In addition, the policy should also deal with, where relevant:

• procedures for electing employee representatives and the arrangements which will come into effect for consulting them in the event that redundancies look likely to arise,
• what steps the employer will take to ensure that the need for redundancies is kept to a minimum . This could include factors such as:
  • not recruiting to replace employees who leave
  • retraining existing employees with new skills
  • reducing or abolishing overtime
  • reducing the use of consultants or temporary staff
  • filling vacancies from within the existing workforce
  • short-time working
  • temporary lay-offs
  • early retirement
  • retirement of staff beyond normal retirement age
  • voluntary redundancies
  • job sharing
  • retraining
  • relocation
• criteria that will be used for ascertaining who will be made redundant from within the general pool for redundancy. These could include:
  • skills
  • experience
  • contribution to the firm generally
  • membership of work-related external organisations
  • standard of work
  • punctuality
  • attendance record
  • disciplinary record
• what redundancy pay will be available
• what help will be given in relation to finding alternative employment

How should the procedure be applied

It is important that businesses should not regard the procedure as a straight-jacket but as a starting to point to putting in place those practices which are appropriate at the relevant time. In particular, the employer should also bear in mind the need to maintain a balanced and flexible workforce able to respond to whatever changes come along.

Whilst businesses should always bear in mind the statutory requirements in relation to redundancy - especially in so far as consultations and the giving of notice are concerned - there may be times when considerations outside of the procedure need to be borne in mind.

For example, firms may wish to give consideration to issues such as counselling for employees affected by the redundancy, plus providing advice on managing financially, finding a new job, attending interviews and retraining to work in a different sector.

Contact our Employment Solicitors for more advice and support on how to deal with redundancy.