By Chris Garner, above, Managing Director of HR and Employment Law expert, Avensure
Making redundancies is an unpleasant task for any business so it’s perhaps understandable that employers prefer to keep departures under wraps. However, accountancy giant PwC recently attempted a more extreme approach, undertaking a programme of ‘silent layoffs’ – a misguided strategy which ultimately meant its plans were anything but silent and resulted in an article in the Financial Times.
The Big Four firm attempted to rein in any chatter around its redundancy programme by preventing those participating in “targeted voluntary severance” from bidding their colleagues farewell. Instead, it limited the number of people employees could contact, while also providing scripted notes. It’s a heavy handed strategy that was doomed to failure. It not only insulted those who had agreed to leave, diminishing their contribution to the firm, while stoking mistrust among its remaining team and risking damage to the brand and its reputation in the market.
The lesson for any business undertaking redundancy or a restructuring process is to tread carefully. Redundancy is difficult both for those losing their job as well as the remaining team; taking a transparent approach, with honest and open communication, is always the best plan of action.
Getting redundancy wrong can have wide-ranging consequences – including the potential for legal penalties. The biggest mistake employers make is launching headfirst into a redundancy situation without weighing up the many legal pitfalls that could lie in wait. There can often be a sense of urgency when redundancies are made, but it’s important that employers take the necessary time to plan before they make any company announcements and certainly before any dismissals take place.
We know that redundancy employment tribunals are often won or lost in the planning stages and in the effectiveness of communications; something PwC would be wise to note.
So, what can businesses do to manage redundancies properly, and what does best practice look like? There are a number of key things to consider when faced with a potential redundancy situation:
Confidentiality
Where redundancies only affect a portion of the team, employers are naturally concerned about the inevitable impact the redundancy rumour mill will have on the morale of remaining staff. Therefore, it is important to ensure that those affected by redundancy are advised to keep the details of their consultations confidential, save only for discussions with their representatives, legal advisers or HR. This is why it is important for employers to plan and carefully identify the roles to be placed at risk of redundancy. It can be equally damaging to fail to place the right employees at risk as it can be to place a role at risk of redundancy unnecessarily.
The employer must always observe confidentiality, but it is often a good idea to get ahead of the rumour mill and advise other colleagues that whilst their roles are not envisaged to be affected by redundancy at this time, their understanding and sensitivity towards what some of their colleagues are going through is appreciated. A programme of ‘silent lay offs’ will simply stoke rumours and sow more disquiet among the remaining team, while acting poorly toward those staff forced to depart.
Beware the redundancy sham
Redundancy occurs where a role or roles have ceased or diminished in some way. Where an employee is under-performing or failing to follow company rules, this is not a redundancy situation and could lead to a claim for unfair dismissal. Instead, it’s important to manage rule-breaking and poor performance via disciplinary and capability procedures.
The role is redundant, not the person
If you’re faced with a redundancy situation, you must ensure that the correct roles are identified and placed at risk of redundancy. Lots of redundancies fall at tribunal because an employer has unfairly singled someone out for redundancy when, in fact, there were other employees in the same or similar role that should also have been placed at risk of redundancy and selection criteria used to make a fair redundancy selection.
Timings
Redundancies are often time-sensitive but where 20 or more redundancies are proposed, the employer must ensure that collective consultation rules are followed. For 20-99 redundancies, a 30-day consultation is required before the first dismissal takes place. Where 100 or more redundancies are taking place, there is a 45-day consultation period. Failure to adhere to these rules could result in financial penalties on top of tribunal claims.
Meaningful consultation
This is where effective communication, honesty and transparency is vital. The purpose of consultation is to try and avoid a redundancy, no matter how much the writing appears to be on the wall for a particular role. The affected employees and their representatives must be informed of the reasons the business is considering making redundancies, why any alternatives or suggestions presented during consultation are not viable and how those made redundant will be selected.
When an employer fails to meaningfully consult with affected employees, or fails to consult altogether, they miss the opportunity to assure their employees that compulsory redundancies are the absolute last resort, which in turn exposes their business to risk of unfair dismissal claims.
