5 top tips when embarking on a redundancy exercise

We know that some businesses will be critically considering how to reduce their cost base, with redundancies being on the agenda or near horizon for others.  If you find yourself about to embark on a redundancy exercise, here are our 5 top tips for making life easier:

1. Be on top of the numbers

When it comes to making redundancies, 19 is an important number.  This is because if the total number of roles affected by the redundancy / restructure is 19 or less, then you won’t need to undertake any additional collective consultation before the first dismissal happens. Even if the total number of roles that are in scope exceeds 19, it still may be possible to avoid having to undertake any collective consultation.  One important consideration when totting up the numbers is whether the affected roles are all at the same establishment or whether they are spread across different establishments.  Only if the redundancies are at the same establishment will they need to be counted together.

2. Be creative and consider alternatives

Given the tight labour market, redundancy should be an option of last resort.  Creative alternatives to redundancy could include:

• introducing a 4-day working week, an initiative that has been trialled successfully in many organisations, either on a temporary or permanent basis for some or all groups of staff as an alternative to redundancy;
• opening up a voluntary severance scheme for a limited period of time, with the offer of an enhanced package for those whose applications are granted;
• introducing a temporary furlough-style arrangement whereby employees are not required to attend work (and are permitted to find temporary employment elsewhere) in return for a retention payment. This could be particularly attractive for businesses concerned about their ability to recruit skilled workers if work levels pick up in the short term

3. Do not ignore employees on long-term sick leave or family leave

When considering the roles to be placed at risk of redundancy, it is important not to overlook the roles occupied by employees who are not actually at work for a justifiable reason, such as long-term sickness or maternity.  There’s no requirement to ring-fence such employees and, indeed, doing so could be risky as the individual may lose out on the opportunity to apply for suitable alternative roles.

4. Consider whether an appeal process is really needed?

There is no automatic right of appeal to a redundancy decision, unless there is an appeal provided for in any published redundancy policy, and it can extend the process unnecessarily.  A recent Court of Appeal decision held that the lack of any appeal procedure does not, of itself, render a redundancy dismissal unfair; however, it will be a factor in determining the overall fairness of a dismissal.  For smaller employers with limited resources and/or for individuals with less than 2 years’ service, not offering the right of appeal could be a time-saving option.

5. Ensure any enhancement to redundancy pay is genuinely discretionary and not contractual

Where an employer has offered discretionary, non-contractual enhancements to redundancy pay in past exercises, it is important that the discretionary nature of those arrangements is preserved; the employer does not want their enhanced redundancy policy to become implied into employees’ contractual terms by virtue of ‘custom and practice’.  There are various ways for an employer to avoid the policy becoming contractual.  It is a good idea for employers to underline the discretionary (and non-contractual) nature of such arrangements in all published material and to consider (and be seen to consider) afresh, and at the start of each redundancy exercise, what, if any, enhancement will be offered to individuals exiting the business via redundancy.

If you are contemplating having to make redundancies, and would like some guidance or reassurance, please get in touch with a member of our expert team at info@torquelaw.co.uk or 01904 437680