Redundancy advice for employers

Since the coronavirus first reared its ugly head, redundancy has become a saddening reality for many people. Many local Brighton businesses are wondering how they can stem the flow of cash out of their business, while avoiding the painful redundancies of their more experienced and valuable staff.

So, what can businesses do to stay afloat and protect valuable jobs? There are ways that businesses can hold onto staff, even if it takes some creative thinking. For those businesses who are forced to make staff redundant, you should be mindful of what the redundancy process involves to ensure you don’t open your business up to further financial and legal risk.

Losing a member of staff that has been with your business for years can be heart breaking for both the employee and the business, and good businesses should want to keep experienced and motivated employees.

Luckily, there are a more than a few considerations to take into account before deciding on whether to make cuts:

1. Consider limiting or stopping the use of any self-employed contractors or freelancers
2. Remove non-contractual benefits – even if temporarily to start
3. Seek applications from staff to work flexibly, or to enter new working arrangements like job shares or part-time hours
4. Offer voluntary redundancy or early retirement to allow those who want to leave the business to do so themselves and on dignified terms
5. Offer unpaid leave or sabbaticals to any staff who are willing to take these options
6. Stop any recruitment that you had in progress or planned
7. Reduce or prohibit overtime
8. Ask staff to work shorter hours than they normally would
9. Ask staff to take a voluntary pay cut until such a time that the business can afford to pay them the difference
10. Redeploy staff to fill vacancies in other areas of your business

In isolation, any one of these actions will probably not deliver huge results, but combined, they can allow large financial savings and, crucially, the survival of your business.

But what happens if these measures aren’t enough?

Redundancies strike fear into the hearts of business owners and employees alike. The last thing businesses will want to do is mess around employees by following incorrect processes, as this is when claims for unfair dismissal can happen and emotions will run high.

It’s important to remember that redundancy means you’re removing employees because you no longer need or can no longer support having their role. You cannot make people redundant simply because you want to recruit cheaper labour.

Here’s how redundancy works:

Officially, you only have to hold consultations with your employees if your business employs more than 20 people who are legible for redundancy. However, it is not difficult to hold talks, and it’s best to do so regardless of your business size as failing to do so could lead to a claim for unfair dismissal.

In fact, the redundancy process is entirely aimed at ensuring that the process has been fair, and that every employee has been offered an equal selection opportunity to remain employed, based upon a level playing field.

Red flags will start waving if every pregnant woman, disabled employee and employee over the age of 50 suddenly finds themselves redundant.

The entire redundancy process should follow this schedule:

1. Notify the Redundancy Payments Service (RPS) in advance of the first consultation
2. Start your consultations. This can be with trade unions, elected staff representatives or directly with your staff on a one to one basis
3. Advise your staff or representatives on what the planned redundancies are, what the selection criteria will be and how the redundancies will be performed
4. Listen to the feedback from your staff and respond accordingly
5. Notify any of the staff who are being made redundant of their leaving date
6. Issue the redundancy notices

There are specific notice period guidelines that must be followed depending on the size of your business. We are happy to help advise on what your business needs to do if you are unsure.

Honestly speaking? No.

At first glance, the process seems simple, but there are considerations involved during each stage of redundancy that complicates things. COVID-19 has only made this list of considerations longer.

For example:

• How much redundancy pay does a business need to pay and how does furlough affect this?
• Can, or perhaps morally, should you make a member of staff redundant rather than furloughing them?
• What level of detail do you need to go into during the consultation process?
• What happens if you cannot reach an agreement during consultation?

Businesses should try to do everything that they can to retain valuable staff. After all, you are not alone in your suffering and in the current climate, staff are going to have a tough time finding another full-time role. Focus should be placed on keeping roles and finding new ways of reducing cash spend.

Redundancy is a last, but sometimes only option. While the process is fraught with things businesses must remember, it can be broken down into simple steps to ensure the process is carried out properly. We are always here to help if you get stuck.

Paul Britton is the founder of Britton and Time Solicitors, a new, award-winning law firm in Hove that helps business owners and individuals with their commercial and personal legal matters.

If you want to contribute to the Chamber blog, contact us on hannah@brightonchamber.co.uk