In light of the current economy and the challenges facing the recruitment sector, as well as the knock-on effect of the pandemic and Brexit, employers are having to make tough decisions regarding staffing and the survival of their business.
If streamlining your organisation and making redundancies is now a reality for you, there are many things to consider; not only adhering to legislation and making sure you act appropriately but also ensuring you act openly and honestly when dealing with the people who have loyally supported you through the past few years.
First of all, decide whether redundancies are really necessary. It will always be a controversial way to cut costs and the negative impact of decreased employee loyalty and engagement should not be underestimated due to the adverse impact on performance and productivity.
Kevin Poulter, employment partner at Freeths said “Consultation processes must be meaningful and proactive, allowing for challenges to management decisions and to create opportunities where they may not previously have been considered or even existed.”
Reduced hours, lower compensation, voluntary layoffs, sabbaticals and benefit cuts can all help organisations save money and get through a difficult period, “but to be successful employers must build a relationship of trust, honesty and shared ambitions with their workforce, starting way before times become troubled”, explains Poulter.
Maybe ‘rightsizing’ is a better alternative. As opposed to downsizing, rightsizing optimises the workforce through restructuring; eg. reassigning internal talent via retraining and utilising existing transferrable skills.
Unfortunately, this won’t be an option for all businesses, so if redundancies are the only way ahead, here’s some things you need to know.
Reasoning
Make sure you are clear – and communicate this well – for the reasons behind your decisions to avoid ambiguity. For example, is it due to a cessation of a type of work, the workplace is closing, workloads have diminished. Communicating this consistently, and being transparent about the processes going forward, are key to avoiding potentially exorbitant Employment Tribunal claims.
Legislation
Get a clear strategy in place supported by extensive documentation. This will prove invaluable in the face of tribunals or grievance procedures. Pulling together a team to take ownership of implementing the process will provide support and help both employees and management get through this. You will also need to make yourself fully cognisant of all legal requirements to ensure you are fully compliant with the law.
For example, recently the employees at Made.com discovered they would lose their jobs over a company Zoom call – 573 of them. Current employment law states that if a business is making more than 20 employees redundant, they must follow a consultation process, and a claim for a protective award (which could potentially award eight weeks’ wages in compensation).
Compliance
Fulfilling your legal obligations is more than just a tick box and the consultation process isn’t just lip service.
According to Michael McCartney, employment partner at Fladgate, UK employment law requires a business to consult with elected representatives or trade unions if there are any recognised for a minimum period of 30 days where it envisages 20 or more redundancies, and for at least 45 days if that number exceeds 100 layoffs.
“The corporation is also obligated to issue a warning to the UK government, called an HR1 form, and, if it fails to do so, its directors run the danger of criminal liability,” says McCartney.
As mentioned previously, employers should show that they have investigated alternatives to layoffs as part of the consultation process. Some employers have tried staggering redundancies to avoid the consultation process, but when time is of the essence this isn’t always possible. And, remember, insolvent companies must still adhere to the same legislation (excluding ‘exceptional circumstances).
Communication
Being respectful during the redundancy and/or consultation process is vital. All communication should be clear and consistent, but also sympathetic. These are people, loyal people in most instances. Support in communicating processes and managing expectations can be found in most social media networks and HR groups.
Supporting the supporters
It’s important to remember that it’s not just about management and employees, supporting your HR team, who will be bearing the brunt of this, is key.
Jane Ferré, executive career coach, says “Often, they are the forgotten people in any redundancy programme as they are balancing the needs of the business, the people and the line managers.”
She adds that HR plays a crucial role in safeguarding the company, helping individuals who would be affected by the proposed layoffs and supporting the line managers who must “deliver painful messages while they could also be facing a possible layoff”.
While all this may sound quite daunting, it can instigate real change and breathe new life into a flagging business if handled sensitively and sympathetically.