No business leader wants to make the difficult decisions brought on by the pandemic – particularly when it comes to letting people go. We invited Acas senior adviser Faye Law to join us to answer some of your key questions on redundancy – including alternative options businesses can consider.
Acas and the CBI recently worked with the TUC on a joint statement about how to avoid redundancies; how to consult on them; and when you really have to: how to do them the right way. The three organisations made very clear that employers should think long and hard before making redundancies, and involve staff in their considerations.
What other options can firms look at before making redundancies?
Faye - I think the first question is ‘do we need to make redundancies’? Are there other business models available? Could you extend any loans or financial support available? Are any staff considering early retirement or reducing hours? Don’t make assumptions – that could prove expensive – but do let your people know their options.
Ask employees for ideas. Redundancy and later re-recruitment is expensive. The most creative solutions can come from staff - about new business models, engaging customers differently, working hours, training, cutting overtime or even taking temporary salary cuts.
But bear in mind that any changes to the contract requires consultation with any recognised trade union or with every individual directly. Not doing so risks claims for Failure to Consult and Unfair Dismissal because you will have effectively terminated the old contract.
If you do need to restructure with fewer people, think about the viability. Is the new structure sustainable and does it retain as many staff as possible? Keep in mind your reputation amongst customers, in your local community and your remaining staff if you are seen to have closed too early or when still viable versus if you do it in as limited way as possible, preserving the dignity of all those involved.
We have seen some excellent examples of employers coming together with employees and their Trade Union reps to find workable solutions to redundancies. These solutions invariably come from organisations who are more forward thinking and able to avoid making panic decisions – which means that they will benefit from retaining loyal skilled staff. Of course, there is an added business benefit – avoiding the costs of redundancies and the inevitable employment tribunals.— Faye Lawe, Senior Adviser, Acas
I have seen a few circumstances which have been successful, where employees agreed short term layoff clauses (with lower pay) added to their contracts, which allowed the employer a little leeway to recover before bringing staff back. You have to be mindful of employment law when exploring these alternatives though – as I have also seen that backfire.
How should my business communicate redundancy plans? How upfront/ transparent should I be with employees?
The simple answer is to be as open and transparent as you can, as soon as you can, and with everybody (don’t tell one group what’s going on and not another). And engage properly with staff concerns and alternative ideas.
You will get better engagement (and future morale and productivity) from retained staff if they understand why you’ve had to make difficult decisions and trust that your choices were better than the alternatives.
Break down information into digestible chunks. Give your people a clear timeline; what other options you considered and why you rejected them; and explain how the new structure will work and why this option was better than the others. Set out anything that you think they will want to know even if you need to say you don’t have the answers yet.
Once people have absorbed the headlines, they’ll want to know what it means for them personally and what they need to do. Tell them when they will have the opportunity to discuss their thoughts and when they’ll find out about selection. Stick to your timeline, and if it slips, communicate quickly. Weak communications build distrust and resentment.
Finally, always signpost sources of information and support to HR advice, an EAP for wellbeing and financial advice, any local re-deployment and training services. Also think about the mental health of employees – Acas has some great resources and there are plenty of other options out there.
When making redundancies, do I need to first look to those who were on the job retention scheme?
Faye – All decisions on redundancy should be made in fair non-discriminatory way. People who have been on furlough might feel that they were side-lined months ago and have not had an opportunity to demonstrate their skills. Consider using a pre-lockdown reference period.
If people were put on furlough because they were shielding due to a disability or caring responsibilities, you must make sure they are not disadvantaged by that in the redundancy selection. Be mindful of the potential for discrimination.
Beyond being mindful of discrimination, what steps do businesses need to take to ensure they are selecting staff for redundancy through a fair process?
Faye – The Acas website has lots of information about all the questions we are covering here. One strong suggestion is to set up ‘selection pools’ of employees who are at risk of redundancy and assess them fairly and without discrimination. Be mindful of unconscious bias (including the halo effect) when making difficult decisions.
Selection criteria to consider should be measurable and quantifiable, such as work standards, skills, experience and disciplinary records. But I would suggest employers try to avoid considerations such as “flexibility” or “attitude”. These could give rise to indirect discrimination; and may mean different things to different managers (and indeed Employment Tribunal Judges).
What are the stages in the redundancy process?
Faye – We have a process map which sets out a structure for effective consultation for all sizes of employer and number of redundancies planned. As per Acas guidance, consultations must be concluded before decisions are enacted, and the employer must not give notice of dismissals before the end of consultation.
The three tiers are fewer than 20 proposed redundancies (employers must consult individually); 21-99 redundancies (where consultation with a recognised Union or elected representatives must last at least 30 days), and 100+ redundancies (where the consultation must last at least 45 days).
What further support can employers offer employees that have been made redundant?
Faye – That’s a great question, and I am pleased that firms are keen to continue to offer support to staff made redundant (not least because many may be seeking to re-recruit in the future).
In the very short term, any offers of enhancements to statutory redundancy pay will be very welcome, I am sure. Other benefits may be possible, such as retention of some workplace benefits such as subscriptions, health insurance, gym membership, retention of phone contracts, etc.
Under some circumstances, employers must allow those being made redundant to take paid time off in their notice period to job hunt and take advantage of training (for example, CV writing, job search, coaching, shadowing).
Additional support might include Employee Assistance Programmes which can provide counselling or debt advice.
For more on Acas guidance and services, please head to their website.