Redundancies need to be done right, regardless of the reason. They are stressful as the risk of unintentionally messing up is high. The harm done would be to your team, your brand and your business bank balance. The risk percentage increases exponentially if your business is a start-up, without a deeply experienced H.R. Manager (with no previous experience of redundancies) or the complete lack of an H.R. department or H.R. third-party service provider!
You must take the time to be absolutely certain you are taking the right strategic steps for the company, that you are doing the right ethical thing for the people you are making redundant, and taking every precaution necessary to keep your remaining team’s morale up.
Can you just make someone redundant?
Redundancy is a process, not a step taken on any particular day. There is a lot of preparation that gets done in the background before the staff get wind of it. When your business no longer needs the work done by someone, or you are ‘firing’ (terminating) someone, they both require a process.
You can only make team members redundant subject to:
The legally viable reasons behind your decision
Whether the role fulfils or does not fulfil your business’ needs
Your across-business hiring or repositioning of people
You’ll have to tick all the required criteria to be compliant
Avoiding redundancies altogether is the preferred option by Acas, the public body that advises on employment law in the UK. It is also the best business strategy for the morale of your team. It is a good time to test your management skills with thinking outside of the box for an alternative solution. Be that as it may, there are many steps before redundancy starts.
For example, attempt cost cuts that don’t extend to letting people go, such as cheaper office space, withdrawing perks and benefits, reducing casual labour use, and slowing down recruitment in other business areas.
Voluntary redundancy might be attractive to some people.
Compulsory redundancy or involuntary redundancy happens after taking extensive measures to prevent redundancy and offering voluntary redundancy.
Step 1 – Doing a redundancy consultation isn’t an optional step in the process. If you skip it, any redundancies made are almost certainly going to be deemed unfair.
So firstly, you notify your employees that you are entering into a redundancy consultation. You give them the business reasons, the expected redundancy numbers, the departments affected, the redundancy selection process, how the redundancy will be carried out and how redundancy payments will be calculated.
If you are aiming to make 20+ people redundant, then a collective consultation is legally required with a person representing the affected group. The Redundancy Payments Service needs to be notified before you start.
Being made redundant means different things to different employees, and you need to consider their own personal circumstances. You will need to prepare, per person, considerations of the next steps. Will you want them to work during their notice period or have such an emotional reaction to it that it affects the rest of the team too much?
In the case of the latter, would you want them to leave the company immediately or merely leave the office immediately and work from home? This would have to be coordinated with the support that you are offering them regarding finding new work.
Perhaps the staff member would consider being moved to another role to avoid being made redundant? Are you fully aware of ALL their skills, or do you only know the skills that are shown in this current job? They might be in customer service right now, but perhaps they have a flair for copywriting for the marketing department. They might also be a compassionate and effective H.R. person if sent on training and then upgrading with each level of training achieved.
Step 2 – You are also obliged to notify specific employees potentially affected via an ‘at risk of redundancy letter’. Include details such as reasons for redundancies and the length of the process.
Step 3 – When more than one person is doing a redundant role, you need to choose who goes. The decision must be fair. You may NOT discriminate according to who you personally prefer. Base it on skills, qualifications, aptitude, historical performance, attendance, disciplinary record, and tenure length.
Illegal factors are pregnancy, use of statutory or contractual parental leave, joining a trade union, age, disability, gender, marriage and civil partnership status, religion, or sexual orientation.
Step 4 – After the redundancy consultation, you need to notify employees of your decisions and related reasons. This is best-done fact-to-face. Don’t drag out the redundancy conversation. State it clearly in the first sentence and immediately go into the reasons. Keep the conversation impersonal and within the frame of business logic.
They might request specific help which you should offer. Listen, but don’t drag it out. End off the compassionate, helpful discussion by explaining to them that your business will offer support to provide them with relevant help in finding them a new role.
Career advice could come from senior members of your company, or it could be from an employment agency. The employment agency has vested interest as they will obtain income from the new company that they place this person into. The agency could, therefore, assist with guiding the person on how to write up a great CV, distributing the CV to the prospective clients as well as run through interview behaviour, answers and techniques.
Your company could still assist with introductions to other businesses where there might be a suitable role, guiding the staff member to understanding what roles would be a better fit for them as well as giving the staff member time off from work to attend interviews.
All of these factors will be very beneficial to the outgoing staff member and will show them that they are respected and cared for. This will also show your existing team how much respect is paid towards all employees and that they are working for a brilliant company. This is very motivational for them and is more valuable to them than money or promotions. Having great pride in your place of work means you will go above and beyond in all your efforts to help that business succeed.
Step 5 – Redundancy notice letters must follow on from the meeting, which records what was discussed, the decision made, the reasoning behind it and the support offered in writing.
Prepare that letter very carefully. Include all the information required by the law. It is highly advisable to have an H.R. professional involved.
How quickly can you make someone redundant?
When compiling redundancy notice letters, you must know the answers to these questions before you are handing out those letters:
a) How much notice to make someone redundant? The legal amount of notice depends on their length of service:
1 month to 2 years = at least a week,
2 years to 12 years = a week’s notice for every year,
12 years or more = 12 weeks
b) How does redundancy pay work? This is notice pay (or payment in lieu of notice) and statutory redundancy pay.
Notice pay is the employee’s salary that you are obliged to pay for their notice duration. You can pay their notice pay in advance if you would prefer them to leave immediately.
Statutory redundancy pay is set out by UK law at minimum level. An employee needs to have been employed with you for two years.
c) How is redundancy pay calculated? This is calculated using the employee’s age and the length of their tenure via these factors:
1.5 weeks’ pay for each full year of employment after their 41st birthday
A week’s pay for each full year of employment after their 22nd birthday
Half a week’s pay for each full year of employment up to their 22nd birthday
The upper limit on the amount of statutory redundancy pay is £15, 750.
So your redundancy letter will have the right notice period, the notice pay, and the redundancy pay noted in it, and you will have these letters delivered at least two weeks before the process starts.