Is your business wrestling with redundancy?
About our guest bloggers
Ergo Law is a specialist employment law firm helping employers navigate the rules around redundancy. Experienced at advising on the legalities and procedure concerning redundancies, Ergo Law’s solicitors apply a knowledgeable but compassionate approach to difficult business decisions. Ergo Law’s director Emma Reid answers three common questions asked by employers considering making redundancies for the first time.
Is your business wrestling with redundancy?
Setting up and running a business brings challenges; none more so than those brought by the coronavirus pandemic. It is incredibly difficult to watch a business that you are invested in suffer, shrink or diminish and this brings hard decisions about how to cut costs. Despite support from the Government during the Covid-19 pandemic many SMEs are, for the first time in their business journeys, considering making staff redundant in order to survive. Whilst it can be a daunting prospect and no-one feels happy with the notion of making staff redundant, there are some basic rules of engagement to make redundancy go as smoothly as possible for you and your staff. When approaching redundancy for the first time, it’s not unusual to ask…
1. What does redundancy mean?
The legal definition of redundancy covers three main situations:
Business closure (closure of the business altogether);
Workplace closure (closure of one of several sites, or relocation to a new site); and
Diminished requirements of the business for employees to do work of a particular kind.
If the business decision results in a dismissal or dismissals attributable to one of the above circumstances, that is a redundancy situation.
Redundancy may arise even when a company is not facing a downturn in work or financial difficulty. Sometimes, a business may adapt how it works, perhaps restructuring or reorganising to become a more efficient version of itself. Whilst it is not always immediately obvious that a redundancy situation has arisen in these circumstances as sometimes the business’ income has remained steady and the work level constant; if a decision is made that fewer staff are required are required to do a certain type of work then that would fall within the definition of redundancy.
It is important to remember the definition of redundancy covers a specific set of circumstances. If there are other issues with the employee for example poor performance or conduct concerns, then those should be dealt with by applying the appropriate performance or disciplinary process.
2. What process should I follow?
It may come as a surprise to businesses facing redundancies for the first time that there is no mandatory statutory procedure to be followed for individual redundancies. There are, however, statutory consultation requirements to consult collectively where an employer is considering making 20 or more staff redundant from a single establishment within 90 days. These requirements are in addition to the need to consult on an individual basis and involve more detailed consultation over a prescribed time period.
An obligation to consult collectively exists in addition to the obligation on all employers to undertake individual consultation.
Whilst there is not statutory procedure, case law does provide guidance on what will be seen as a fair dismissal for redundancy. A fair dismissal involves assessing whether an employer has behaved reasonably and this means:
Warning and consulting with employees;
Adopting fair selection criteria and apply them fairly; and
Considering alternatives to redundancy including any suitable alternative employment.
3. How do I start a conversation about redundancy?
In the current circumstances it is highly likely that employees will have some understanding of the impact Covid-19 has had on the business. Nonetheless, approaching the subject of redundancy can be intimidating. It may be helpful to consider that the purpose of that conversation is to inform, consult and explore all possible ways to avoid redundancy as an outcome before any final decisions are made. Being open about the challenges faced by the business, the impact of the downturn in real terms and the measures that have been taken to minimise the impact on employment will register with employees. As an employee it is never good news to hear your job is at risk but treating employees as active participants in the conversation will position things appropriately. Informing employees on the facts and opening the conversation with an invitation to contribute and explore all possible ways to reduce cuts and preserve the business is the right way to do things.
Ergo Law offers fixed fee advice whenever possible to provide a fully informed and supported redundancy process for SMEs without surprises on costs. Do get in touch to discuss your circumstances on 0131 618 7007. More information on our services and approach can be found at www.ergolaw.co.uk