Let’s talk about redundancy.
It is not a thing many employers like to dwell upon, and for employees who face the chop it is even less pleasant. Bills to pay, the pride in one’s work, severing of relationships with colleagues… there is potentially a lot for them to lose. Some, though, may have other plans and consider it a blessing!
Nevertheless, redundancy is a part of employing people: in the three months to May 2024, 98,000 people in the UK were made redundant. This is slightly above the figure from March of 90,000; but well below the pandemic peak when 420,000 were made redundant in the three months before November 2020.
Many SME employers, for whom redundancies may feel much more personal, aren’t aware that there are rules to follow in order to compliantly make someone redundant. Get it wrong, and you could find yourself paying out more after an employment tribunal.
Whenever you think redundancies may be the answer, you should develop a robust business case to inform the subsequent process. You want to be fair, and also emerge with the best people left in the business to take you forward.
What are the main considerations for SMEs with redundancies?
There are specific rules around consultations, redundancy pay, notice periods and protections from redundancy.
First, you must consult with employees under threat from redundancy. If you have a larger business and at least 20 employees are to be made redundant then this consultation needs to start at least 30 days before any dismissals. If more than 99 redundancies are anticipated, this rises to 45 days. A collective agreement may need to be considered.
All staff must be included in the consultation process including those on long term sickness absence or maternity leave. A consultation should be a meaningful two-way conversation, and you should see this as a positive. We have seen plenty of examples where employees have come up with ideas which mitigate the redundancies, and a compromise is found.
For instance, someone seeking a new work/life balance and happy to drop their hours, or perhaps learning that someone else was thinking of leaving for a new opportunity anyway. You must always look for suitable alternative roles which could be offered. A person may accept an alternative role on a trial basis first.
There is a risk of discrimination when it comes to redundancy, and so it is important to include all staff with the same, or similar roles, in the selection process. Creating selection criteria and then marking everyone objectively ensures your best performing staff remain. Redundancy protections have recently been extended significantly around pregnancy and maternity.
There are statutory redundancy pay amounts based on length of service, and age too. The notice period may be statutory or contractual.
Other considerations
So we have established you have to follow a process, but what if you hit a road bump?
You’ll have your own timeline you wish to stick to, especially if budget is tight and the reason for the redundancies. It is the case though that sometimes it is all too much for the employee and they don’t engage with the process, they may even go off sick with stress.
In these cases, try to remain supportive – it is the human element at play here. There is a heightened risk of unfair dismissal if you rush it through.
Many employers like to include some outplacement support to ease the transition. This may include CV writing training or interview training. Employee Assistance Programmes (EAPs) can be worth their weight in gold at this point, an outlet of expert third-party telephone support to affected employees. They do also have a right to a reasonable amount of time off to attend interviews for new jobs.
It’s okay to change your mind too! Perhaps a new contract is won which saves the day. Or you are able to relocate as an alternative way to cut costs.
Seek professional help
Making redundancies is one of those times when it really pays to get expert help from the start, and we are here for you. Not only is it getting the process technically right and covering yourself legally, but also having an adviser by your side to offer you practical tips and reassurance which eases the path. Thinking you may have to make redundancies? Talk to us first to find out how we can help.
