Managing the Redundancy Process
Printed from www.survivingredundancy.ie Copyright © 2012
What's the correct way to carry out the redundancy process in your company? How can Surviving Redundancy can help
When considering making people redundant, most employers focus almost exclusively on the legalities. While these are important, there are more important business and human considerations. In fact, by giving some thought to these considerations, you will, in most cases, be complying with your legal obligations. The legal obligations are important and are dealt with in another article.
Your objectives
- To cut payroll costs
- To treat the redundant employees fairly
- To avoid claims for unfair dismissal
- To retain the key staff you need for the survival of your business
- To boost the morale of the remaining employees
These objectives are all interlinked.
For example, treating employees fairly will reduce the risk of a claim for unfair dismissal and will also boost the morale of the remaining employees.
Cutting payroll costs now secures the long term future of the company and secures the employment prospects of those key staff who remain. Although they will be upset to see their friends and colleagues losing their jobs, they will realise that this is necessary to secure their own jobs. Stress this to them.
Start the consultation process as early as possible
When there is a risk of redundancy, call the staff to a meeting and let them know that the company is looking at ways to cut payroll costs. This will have a number of benefits
- It might prompt some people to start the job hunting process, and they may leave voluntarily.
- Employees who are thinking of buying a car or a house, may defer their plans.
There may be some risks to starting the consulting process early
- Key employees may start the job hunting process
- Someone who was planning to leave, may stay to avail of a redundancy payment
Minimising the number of compulsory redundancies
- Natural attrition, career breaks and job sharing
- Terminating employees with less than one year's service
- Fair dismissal of non-performing employees
- Short-time working and temporary layoff
Natural Attrition, career breaks and job sharing
At any time, there will be employees in your company who are reviewing their options. Some may be planning on leaving over the next few months. Some may be interested in taking a year off to go travelling. Some may want to voluntarily reduce their hours. Someone may be pregnant and she has not told you yet.
If you begin the consultation process very early on, you may well bring this forward. Someone who is leaving anyway often realises that if they bring their plans forward, it will save the job of one of their friends and colleagues.
If somebody is thinking of leaving or going on a career break, the tax-free statutory redundancy payment may encourage them to bring this forward.
Some staff who may be thinking of taking a career break may be unwilling to do so in the current climate as their job may not be there when they come back. You can tell such employees that you will give them preference on their return in exchange for taking unpaid leave now.
Termination of employees with less than one year's service
Employees with less than one year's service are not covered by the Unfair Dismissals Act. If they are not performing, then they should be let go. In better times, employers often gave such employees more time to prove themselves, but employers need to be tougher in the current climate.
However, if you let go 5 or more employees even if they have less than one year's experience, it may constitute a Collective Redundancy. (link to be provided)
Good staff are hard to find, and if you have someone with less than one year's experience who has very good skills and experience and is a high performer, you should retain them. Don't go for the lazy option of Last In First Out.
Fair dismissal of non-performing employees
You should not dismiss employees to save you making them redundant. But if you have already begun the disciplinary process and it's fair to go to the next stage of it, then you should do so.
However, when selecting people for redundancy, you can use the disciplinary record as one of the criteria, so it might be easier to select that person for redundancy as there will be less risk of an Employment Appeals Tribunal case.
Short-time working and lay-off
Most employees are open to taking a cut in working hours and salaries in order to maintain as many jobs as possible. As the reduction in salary will be at the higher rates of income tax and as they will be paid Jobseekers Benefit for the days they don't work, the drop in income might not be too severe for low to mid-level employees. If you choose this option, check out this article to maximise the benefits for your employees.
Sustaining morale during the redundancy process
The best way to sustain morale is to treat people fairly. If there is a widespread perception that the process is unfair, there will be a serious morale problem. By engaging in extensive group and individual consultations, you can maintain the morale.
Most organisations which make people redundant, let them go immediately they give them notice. This is done on the grounds that they don't want them to be around being negative and affecting other staff. On the other hand, telling someone on Friday that they are not wanted on Monday can seem too brutal. It gives the redundancy the flavour of a dismissal.
Retaining Key Staff
You should speak on a one-to-one basis with all staff and not just those whom you have identified for redundancy. The redundancy process is very unsettling and some of your key staff may well leave. The more skilled staff are more likely to find it easier to get jobs. You should sit down with these staff and discuss their career with them. Let them know that they are key to the success and survival of the company. Ask them their ideas on reducing staff and avoiding redundancies. They will feel more empowered.
If you have a voluntary redundancy scheme, let them know that you do not want them to apply for the scheme.
Key staff may feel guilty that they have been retained while their colleagues have been let go. Let them know that they deserve to retain their job due to their higher performance or skills.
Boosting the morale of the workforce post redundancy
The redundancy process is very destabilising. Employees will be worried about their jobs and their finances. Look for opportunities to boost morale
- Meet all the employees on a one to one basis to discuss their concerns
- Consolidate the office into fewer rooms to avoid empty desks
- Have a team building event
- Stay in touch with former employees and help them to find jobs
Have a staff meeting after the redundancies are finished
- Explain again the reasons for the redundancies
- Give a trading update and outline of plans
- Encourage them to help their departed friends
- Discuss how the workload will be distruted among fewer employees
- Look for suggestions on building the business
