Making redundancies: how to get it right HELPING YOU THRIVE IN A - - PowerPoint PPT Presentation

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Making redundancies: how to get it right

Based on age and length of service :

• Employee 1 – 45 years old, 8 years service, on a salary of £75,000
• Employee 2 – 66 years old, 20 years service, on a salary of £19,000

Two main elements:

• notice pay (contractual and statutory) taxable / NIC
• redundancy pay tax free to £30,000

No requirement to make redundancy payment for those with less than two years service. Announcement: Friday 17 July – you can claim for notice pay under the Coronavirus Job Retention Scheme. Car Allowance – if treated as remuneration during furlough, this will need to be calculated for PILON purposes.

Making redundancies: how to get it right The cost of redundancies

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Consultation - what is it? Based on the numbers proposed to be redundant (within a 90 day period) not on the numbers you are consulting with:

• 0 – 19: A reasonable period of time
• 20 – 99: 30 days (complete HR1 form)
• 100+: 45 days (complete HR1 form)

It is an employee’s legal right to raise alternatives during a consultation period and it is the employer’s obligation to consider any alternative raised. Don’t dismiss suggestions too quickly, there will be times that viable alternatives are raised that you haven’t considered.

Making redundancies: how to get it right The process

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Individual roles v reducing team sizes. Standalone positions – not always enough to rely on job title alone. Roles that have crossover, require similar skillsets and on comparable terms may need to be pooled. Number of people in a team is reducing, the team will be pooled. You can choose to follow an interview process to select successful employees or use a selection criteria and score on each element. Selection criteria: objective criteria is easier to demonstrate, subjective criteria can be used, but ensure you can provide examples. Point to note: pregnant employees or employees on maternity leave.

Making redundancies: how to get it right The process

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• Why the redundancies are considered necessary
• The number of employees likely to be made redundant
• How the dismissals will be carried out and over what period
• The method to be used in calculating redundancy and severance payments
• How the affected employees have been selected

How you can help to ensure the process will run as smooth as possible:

• Be clear, transparent and honest
• Adapt to the individual

Making redundancies: how to get it right What you must tell the employee

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• Lay out the process from the outset and stick to it
• Create a timeline
• Schedule meeting including times and who with

First meeting - at risk letter, estimated payment schedule (selection scoring if applicable) Second meeting - to explore alternatives Third meeting - deliver outcome (remember even the final meeting is a consultation meeting. Be prepared not to make a decision if not appropriate). Deciding on the method of communication. Tone can be more important than ever in current times.

Making redundancies: how to get it right The process – under 20 employees

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• If unionised - consult with the union
• If not – employees to elect representatives before the consultation starts. Employer can make recommendations but

can have no control over the election. Consult meaningfully – expect at least three meetings with the employee reps. The first you will do most of the talking, the second will be led by them, the third will be for the business to respond. Tribunal claims generally centre around failure to consult. Therefore, review and consider all suggestions to avoid redundancy. You’ll also need to consult with the employee representatives on the scoring criteria you plan to use. Individuals in a pool will not be removed from the process until individual consultation. Plan this process well, ahead of time, sharing a timeline with all employees at risk if you can. Employees who aren’t elected as reps may become jittery. Reduce the number of queries you receive.

Making redundancies: how to get it right The process – 20 employees and above

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• Promote any Employee Assistance Programme scheme they maybe able to use.
• Allow them access to you during the process (be careful what you say).
• After the process offer outplacement (if you can) or even just link your employees in with agency

contacts.

• Reasonable time off for interviews.
• Redundancies can be extremely emotive for all parties, but try not to talk about how hard this if for

you.

• Understand your employees, adapting your communication style to the individual.

Making redundancies: how to get it right Supporting your employees

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• The hardest meeting will be the first one.
• Take time to consider the queries / alternatives raised but respond as quickly and effectively as

you can.

• Keep notes of the meetings, with someone else present if possible.
• Expect the unexpected!
• Remember to support your employees who aren’t part of the process.
• Think about who is leading the process.

Making redundancies: how to get it right Some advice:

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It’s not something you must offer. Advantages:

• Employees feel more in control of the process
• Often reduces the risk of Tribunal claims
• Less difficult conversations
• Can speed up the process

Disadvantages:

• Employees you want to retain may opt for redundancy
• It could affect morale if you refuse requests for voluntary redundancy
• You could receive too many requests

Making redundancies: how to get it right Voluntary redundancies:

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Lots of options outside of redundancy:

• Reduced working hours
• Pay cuts
• Deferred pay / bonuses
• Home working – reduce salary by travel costs
• Sabbaticals
• Remove or reduce benefits

It might not save all jobs, but it could reduce the number you need to lose.

Making redundancies: how to get it right Avoiding redundancies

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