A Manager's Guide to Managing Redundancy

Ignore at your peril

Many British businesses have been slow to appreciate the full extent of changes that have occurred over the years to Employment Law and continue to adopt out of date disciplinary and redundancy procedures. Lucky for them then that the only people who seem less aware of the changes are the employees themselves; few employees would believe the extent that they are now protected, but that is not likely to last.

With the maximum compensatory award in unfair dismissal cases now over £50,000 and with tribunals willing to make awards without any regard to a company's financial position, small to medium sized businesses are most at risk.

Part-time and agency workers now have comparable rights as those enjoyed by full time employees and discrimination now carries a much wider definition, with even more to come.

With the introduction of "no win, no fee" legal representation an employee now has little to loose and much to gain by bringing a claim against a former employer. Tribunals do not operate in the same way as a court of law, the company is not 'not guilty' until proven 'guilty' but rather considered guilty until they can prove otherwise. In the absence of real evidence a tribunal will take anecdotal evidence and decide subjectively for themselves as to who, on balance, they believe.

Redundancy guidelines

The redundancy guidelines published by governing bodies and often the advice that is received from employment law specialists is not always as helpful as some businesses might like. Take for example where redundancy guidelines talk of a 'consultation' process, what constitutes consultation is often open to interpretation and what an organisation might itself regard as 'consultation' a tribunal might take as 'a premeditated foregone conclusion'.

This article views the redundancy process from an organisations point of view where senior managers are likely to be under considerable pressure, frustrated and keen to act.

Where fools rush in

Few people, if any, relish the need for redundancies but often there is a desire from management to get a difficult task over with as quickly as possible so that the organisation can move on. Managers need to be educated in the fact that although following the proper guidelines will take longer than just handing out redundancy notices letters the process can bring benefits to the employer if done properly.

In a redundancy situation companies are able to act with complete autonomy, there is no legislative body looking over their shoulders, monitoring the methods used and in the absence of a trade union, employees are unlikely to be au fait with details of employment law. However, if claims of unfair dismissal are subsequently received the procedures and methods a company adopted will be laid bare and heavily scrutinized and the consequences of inadequate procedures penalised. 

A tribunal is not a pleasant place for any company official, with the benefit of hindsight a tribunal will asks difficult questions; what was a real crisis six months earlier may be difficult to convey to people who have no knowledge of the business or in some cases the industry.

Being seen to be fair

Being a good employer who operates in good faith and with genuine intentions is not enough, such employers are more and more finding themselves having to pay substantial compensation to former employees, some of whom may be undeserving but nevertheless know how to play the system.

UK companies are no longer seen as merely providing employment but as being socially responsible and when a company takes on new employees they are assuming more responsibility for that person than many realise.

Today companies have to be very aware of what their responsibilities are and how they must act. For small companies where the owners may be more entrepreneurial, the business more hand to mouth, there is no provision to allow them to operate in any other way than that expected of larger and more established organisations.

Some managers can often make the mistake of thinking that redundancy procedures do not apply to junior staff and will still issue redundancies on the fly, such action will only expose them to a possible claim for unfair dismissal that they will have every chance of loosing.

A step-by-step guide

To support senior managers a questionnaire has been devised that will guide senior management through the steps required when making redundancies.

By completing the questionnaire a manager will obtain a redundancy procedure checklist and if each step is completed a company can be confident that they will be able to vigorously defend any future unfair redundancy claims they receive.

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