Redundancy must be fair and equitable…

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 small businesses your colleagues are often your friends too – the over-riding factor must be to save your business and thus redundancy is sometimes the only way forward.

Apart from the overall unpleasantness of making people redundant, it is a legal minefield for employers and recent case law and legislation have added to the complexity. If employers are to keep their costs to a minimum and avoid Employment Tribunal claims it’s essential that they 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 both the pool of people under consideration for redundancy as well as determining the criteria to be used in selecting those individuals to be made redundant. It is important that the selection criteria is objective and can be applied equally and fairly across the workforce – for example, disciplinary records, absence, 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 the 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 written particulars 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 not only good practice to ensure regular and open communication but this will also help you, as the business owner, to demonstrate that you have conducted the process in a fair and equitable manner and in accordance with the required legislation.