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However well you manage your business, in the current economic climate, there is always the possibility that you may need to reduce your operating costs. Whilst most businesses never want to let people go – in a small business your colleagues are often your friends too – the over-riding factor must be to save your business and so redundancy is sometimes the only way forward. In this situation managing redundancy in the correct way is absolutely essential.
Apart from the overall unpleasantness of making people redundant, it is a legal minefield for employers. Recent case law and legislation have added to this complexity. If you want to keep costs to a minimum and avoid Tribunal claims then managing redundancy in the right way is key. You should always follow the correct procedures and more to the point adopt the correct process when managing each particular redundancy scenario.
Basically, there are five main stages to consider during the redundancy process:
Stage 1: Preparation. This includes assessing whether redundancy is actually necessary before starting the process. You should also identify your time frame and prepare the appropriate documentation.
Stage 2: Selection. This includes selecting the pool of people under consideration for redundancy. You’ll also need to determine the criteria to be used in selecting those individuals. It is important that the selection criteria is objective and can be applied equally and fairly across the workforce. For example, disciplinary records, experience, capability, relevant skills and competence.
Stage 3: Individual Consultation. There are legal time frames regarding consultation depending upon the number of people being made redundant. In any case, it is important to explain why an individual has been selected and to consider alternative employment in the company.
Stage 4: Notice of Redundancy and Appeals. Always remember to write to your employee to inform them of the dismissal and allow them the right of appeal.
Stage 5: The Termination Process. All employees with more than two year’s service qualify for a statutory redundancy payment. Remember to provide the employees with a written record of how the statutory redundancy payment has been calculated.
Throughout the redundancy process, remember that communication is the key. Having determined the need for redundancies and selected the criteria, it is good practice to ensure regular and open communication. This will help you show that you’ve conducted the process in a fair and equitable manner in accordance with required legislation.