Chris Macwilliam – Head of Employment at Clough & Willis Solicitors – on why employers need to take the redundancy process seriously and prepare.

Every single day we are all reading about businesses across a plethora of sectors failing and closing down with many more struggling to survive. This is being driven by a number of factors with inflation, soaring energy costs and people revaluating their spending habits leading the charge.

Unfortunately, this trend is likely to continue for some time so the sole aim for scores of companies right across the UK is to simply survive.

As hard as it is for the individuals involved, staff costs are usually the biggest burden for a business. In reality, this means painful cuts to hours or redundancies. We know this can be equally heart-breaking for owners – especially when they respect their workforce and value their contributions. No-one considers making redundancies lightly and starting the process can be a difficult first step to make. However, our advice is to plan for redundancies now so that if a business reaches that tipping point it knows exactly what it must do to protect itself. It will also ensure that redundancies are carried out fairly and in a way that avoids potential unfair dismissal claims.

Redundancies will generally arise from a number of potential changes to a business, usually: a complete closure of its operations; the closure of a site; the removal of a particular role; or a reduction in the number of people required to carry out a certain type of work. Redundancy is often, and wrongly, thought as being low risk and straight forward, but in reality that is not true. It can be complex and often involves the consideration of a number of variables to avoid a finding of unfair dismissal in the Employment Tribunal.

An employer should therefore take time to go through a process that ensures true consultation occurs. Employers often fall into the trap of first confirming a decision and only then carrying out a consultation process.

The procedure that will need to be followed will depend on the type of redundancy and the numbers involved. For example: is there a pool of employees from which to select? which employees will be included in the pool? how will you select employees from the pool? do you have any suitable alternative roles for those that are made redundant? They must also adhere to a consultation process with the employees which must be carried out over a period of days/weeks  depending on the numbers involved.

There are different rules where the proposal is for redundancies of 20 or more employees and in those circumstances it is a regulated area calling for collective consultation and is notoriously complex.  The price for failure to adhere to the correct procedure is high – up to 13 weeks gross pay for each individual employee affected. However, collective consultation is not a replacement for individual employee consultation.  Fairness to the individual is the requirement for a fair dismissal.

We know that firms are facing a barrage of challenges but preparing for the worst and protecting yourself and your people will help ? as tough as that might seem.