As official figures continue to indicate rising levels of unemployment, many business owners are facing the prospect of having to make staff redundant; something which they might not have experienced before. Research that we conducted earlier this year also indicates that many are actually too afraid of going down the route of redundancy for fear of being sued.
Correctly managing redundancies is essential to avoid ex-employees returning with dispute claims. Yet a large number of businesses admitted that should they find themselves in the position of having to make redundancies, they were unsure of the correct procedures to follow.
With limits on awards for unfair dismissal and redundancy payments increasing earlier this year, the potential financial consequences could easily cripple many small businesses. Yet redundancy remains an unfortunate necessity for many companies in the current economic climate.
With this is mind, here's some guidance on how to plan and manage a fair redundancy dismissal procedure.
Explore all of your options. Once business picks up, it may be difficult to replace the employees you have lost, so it is important to explore all avenues to ensure the best decision is made for the future of the business. Some of the options to consider are reduced working hours known as 'short-time' working, where employees keep their job but earn less money; offering early retirement, which can be less stressful and disruptive; or voluntary redundancy, which means staff can choose to be made redundant.
Selecting employees for redundancy. Before you make any decisions, you need to choose which skills and roles your business requires in the future and also the criteria you will use to identify redundancies. The criteria need to be applicable across all employees, objective and fair, with the most important consideration being the individuals' aptitude for the skills needed by the business. In addition to this, you may make decisions based on employees' punctuality, qualifications, disciplinary records and attendance levels. However, be aware that maternity/paternity, sickness leave and disability cannot be considered. It is imperative to keep a paper trail of all observations during the consultation process in order to demonstrate your methods and decisions in the case of a dispute.
Plan and take advice. When employees have been selected for redundancy it is important to familiarise yourself with the rights of both parties. There are specialist organisations that can guide you through the process and advise you of formal redundancy procedure, including employment law and statutory redundancy payments. In addition, some business insurance providers offer legal advice as part of your insurance policy, which can give you extra support and guidance to avoid any disputes.
Helping redundant employees. The law supports those who suffer discrimination, so it is crucial to demonstrate you are handling all redundancies fairly and with sensitivity. To avoid unfair dismissal disputes, there are steps you need to take to ensure redundant employees are treated equally. Be aware that if in the near future any vacancies become available they must be offered to staff being earmarked for redundancy, as any employment tribunal will carefully consider when such vacancies became available. You can also demonstrate a proactive approach offering them advice for future employment, preparing references, putting them in touch with local recruitment agencies or advising on interview technique.
Security measures. When redundant staff leave the company, it is crucial to ensure all ID badges, passes, swipe cards and keys are collected for security purposes, as well as business owned mobile telephones and laptops. It is also essential to have formal procedures in place to change all electronic and manual codes in order to prevent un-authorised access. This may include codes for the safe and alarm system, computer passwords and remote access log in details.
The future of your business. During this difficult process, it is easy to simply focus on the formal procedures and forget about the employees that are staying. Employees are more likely to stay loyal to the company if you demonstrate that redundant staff have been treated fairly and given advice for the future. To sustain staff morale, ensure you help them to focus on the future of the business and support them throughout the difficult period, making sure productivity remains at its full potential.