No one wants to make redundancies but sometimes these difficult decisions have to be done, but there are rules. Please follow these guidelines making fair to you and your employer.
Guidance on business restructure and redundancy
When you restructure your business, there is the possibility that there may be redundancies. Making redundancies is never pleasant and often leaves other employees wondering if they could be next. Often carrying out a “Business Restructure” is a nicer and more reassuring way of carrying out this unpleasant task.
It is suggested you hold a staff meeting or a meeting of the partners or most senior management. The purpose of the meeting is to address the current problem in the business of usually of income not meeting expenditure. Minute the meeting in such a way that an outsider can see an open meeting took place and you considered other ways of addressing the problem – saving energy costs, less car usage etc, and this was not enough therefore the staffing situation has to be considered.
It is then best to draw up a plan showing the number of people working in each area of the business and then draw up another plan showing the numbers after the restructure. It could be that you will merge certain jobs, outsource certain aspects of the business, use carriers instead of your own vans etc. All these need to be mentioned so there can be no misunderstanding. At this point the procedure becomes like any other redundancy process except you try not to refer too much to redundancies, only to the reduction in staff due to restructure.
Please remember redundancy occurs when a position is no longer needed in a business: the position becomes redundant, not the person. This may occur due to economical, technical or organisational reasons and you must be able to justify these reasons.
When it has been decided that a position must end, your first obligation as an employer is to see whether the person/s occupying the post/s can be offered alternative post/s to maintain their employment. Your new structure will show if that is possible. All options must be considered, however unlikely. This may mean offering a job at lower salary or status – it is the employee’s decision to accept or reject.
If the person works with a number of others you should be considering who, out of the whole group, should be made redundant. For example if there are six people in the welding department and you now only need five, you must have a set and rational criteria to select the person whose position is to be made redundant. It is important you set out these criteria for all to understand how the selection is being made; if you have issued terms & conditions of employment then the criteria is often set out in this document.
If a singular employee is at risk of redundancy, you must give a clear and justifiable reason as to why this is the case, explaining this to the employee at the first meeting.
Throughout this process several meetings will be held. Please note that, unless a Trade Union is formally recognised by your Company, Union representation is not permitted at the consultation meetings; the employee companion is restricted to a working colleague. Where a Company does recognise a Union, the Union Representative must be involved at the earliest opportunity to liaise on its members’ behalf.
The Employee Representatives will meet with management to discuss the possibility of redundancy at the earliest stages; they will be required to meet with their colleagues to detail discussions which have taken place with the management team and in return present employee views to the Company at subsequent meetings; in brief, act as a formal “go between”.
Once early stage consultation is complete, selection will take place (see stage 2). Individual meetings with those employees selected for redundancy will be convened. The Employee Representative may act as employee companion in all formal meetings.
Following proper procedure is vital.
Stage 1 – Consultation
A meeting should be held to explain the restructure and to say redundancies are a possibility: show the new structure and explain why it is necessary. It is good practice, although not compulsory, to ask for voluntary redundancies but you do not have to accept those that volunteer.
You then need to back up the information given in the meeting in a letter and ask any volunteers to let you know in writing, and for anyone to give their comments or ideas for alternatives to redundancy, in writing, by a specific date. Two weeks is generally considered the minimum period for this consultation exercise (there are occasions when it can be shorter – seek advice) and in some cases it may need to be longer.
It is important to retain the best skills mix within the newly restructured company; consider skills/abilities gained during employment and prior. For example, you currently have six welders and, due to customer demand, you are proposing to reduce the number of welding roles to five and one of them must have Corgi registration. If one of the six welders currently holds a Corgi registration, the role should be offered to this employee as alternative employment.
Should you be in a position to offer alternative employment, the employees involved must be offered a “trial period” in this employment where they, and you, can make a decision as to whether the employment is suitable. The length of this trial period will vary depending on the job and what is entailed, but as a good practice guide it should be a minimum period of 4 weeks. During this time, every effort must be made to give the employee adequate training and/or supervision to ensure they have the best possible chance of succeeding. Should the employee decide at any time during the trial period that the job is unsuitable, they may take redundancy instead. Should you decide they are unsuitable for the job, bearing in mind you must have the evidence as to why they are unsuitable, the redundancy can go ahead.
If redundancies are still the only option -move to stage 2
Stage 2 – Selection
You need to use objective selection criteria (often stated in the terms and conditions issued). You may use one or several criteria as long as those criteria are applied to everyone. If there are a number of possible employees for redundancy use a criteria recording sheet to mark each employee, then you will select the person with the least marks to make redundant; this gives evidence of objectivity. It is advisable to have a “panel” eg four senior members of staff, who will be responsible for the scoring. Each person on the “panel” will independently score the relevant employees; the scores are then combined. The selection decision is based on this overall total score. Scoring in this way will demonstrate clearly that the company have been as fair and objective as possible when selecting the positions to be made redundant. When you have made your selection(s) –
Stage 3 – Notification
Arrange a meeting with each person whose post will cease. These meetings need to be formal eg follow the procedure as per disciplinary regarding witnesses and minutes of the meeting as a formal record. Task into the fact that Union representation is permitted only if your Company formally recognises a Union. Explain what has happened and why. Explain details of their redundancy payment and notice period, whether they are expected to work their notice, be paid in lieu or be on “garden leave”. Ask them to think of any alternatives or other jobs they may be able to do within the company. Arrange another meeting after they have had this time to think. This second meeting also needs to follow the formal rules and at this final meeting, when you will be confirming dismissal by way of redundancy, the employee is entitled to be accompanied by their Union Representative. Prepare a letter to give to the employee after the meeting detailing what you have already said. We suggest you then send the person home for at least 48 hours, possibly longer to give them time to think of any good reason why they should not be made redundant, or any good reason why they think you are making the wrong decision.
At the second meeting, ask them again if they have any alternatives and ask for their thoughts on the matter. If they have ideas or alternatives which may be remotely viable, you will need a break in the meeting to consider them or you may need to postpone the meeting for further thought or call a management meeting. If their ideas are not practicable, you need to discuss and explain why. If they have no suggestions, you can continue with the redundancy.
If you do decide to make the person redundant, they must be advised that they have the right to appeal and make sure they understand this. Have a witness to hear you say this, minute it and put their right of appeal in the letter informing them of your decision. The appeal must be to someone other than the person arranging the redundancy, and the same formal rules apply if an appeal is sought.
Redundancy can be complex, especially if you are making several posts redundant
To print and read the document in your own time CLICK HERE
As part of your BFA membership you can call HR4UK on 01455 444222 or email email@example.com