Redundancy – how to handle it.
Redundancy generally happens when a business needs to reduce the number of employees, either because the company is closing or a particular part of their work is no longer required. There may also be a reason for a downturn in trade and as a manager or owner this may be worry to you.
A couple of questions you may be asking yourself are:
Is there enough work to keep your employees busy?
Is there sufficient income to pay wages and keep the company afloat?
If the answer is no to either or both of these questions, your thoughts may turn to making redundancies to reduce the number of employees to cut costs. A daunting prospect which will affect both you and all of your employees, as there will be a considerable period of uncertainty.
Reasons for making Redundancies
- The company has ceased (or intends to cease) the activity for which you employ someone.
- The company has ceased (or intends to cease) in the location where you employ someone.
- The company doesn’t require your employees to carry out a particular kind of work any more.
- The company doesn’t require your employees to carry out a particular kind of work in a specific location any more.
Redundancy can occur where the amount of work reduces or disappears completely. Redundancy can be voluntary or compulsory.
Our 7 step guide to a successful redundancy process might seem a little legalistic, but ensuring you meet legal requirements is essential if your business is changing or ceasing trading. This guide is aimed at small firms, and larger organisations proposing to make fewer than 20 employees redundant.
But before you start the redundancy process, you need to consider the many alternative options you could implement or combine to reduce redundancies, or even prevent them altogether.
Alternatives to Redundancy
- Reducing or ending overtime – ensure you check the employment contracts first.
- Stop recruiting and retrain staff – this is a positive action and can often save you money and improve morale.
- Stop using contractors/casual staff/agency workers – but be clear on their employment status first.
- Offer flexible working – employees are more productive with a better work-life balance, so offer part-time working, job shares etc. It can save you money and avoid redundancies.
- Offering voluntary redundancy/early retirement – Ask employees if they would consider these options (but don’t single out individuals otherwise you could be accused of discrimination, and remember a voluntary redundancy is still a dismissal). If your most valuable members of staff volunteer, you do not have to accept their requests for redundancy.
- Temporarily lay off employees – this is not the same as redundancy. A temporary lack of work and you already have employee agreement (or implement an agreement), you can ‘lay off’ your staff for a period of time, usually with reduced pay.
- Temporarily place employees on short-time working – similar in practice to lay-offs, this is where, with agreement, employees are laid off for a number of days each week, or for a number of hours during a working day.
- Changing your staff employment contracts – Sometimes you might not want to lose your staff, but they can agree to new terms and conditions (varying wages, hours or duties).
So you have gone through all the possible alternatives and you have no choice, redundancies are the only option. To receive your 7 step guide to a successful redundancy process email us now.