5 Things to Consider Before Making Staff Redundant
COVID-19 has swiftly put a strain on businesses around the country and job cuts, especially within small businesses, are growing by the day. While redundancies are something we all wish to avoid, sometimes it is necessary to keep your business afloat.
Making a staff member redundant is not a fun experience for anybody involved. This is especially true in small businesses where you would have worked closely with staff members and formed friendships with the team.
It is important to know the process fully before making any decisions or announcements. Any potential team member that could be made redundant will likely have questions and, by having all the answers on hand, it will help to ease some of the burden on them.
While businesses should make every effort to avoid redundancies, it can sometimes be unavoidable. Here are 5 things that businesses should consider before making staff redundant.
1. Pay Entitlements
When making the difficult decision to make a staff member redundant, the first thing on most employees’ minds will be the worry of lost pay. Especially in this current climate, the uncertainty of not knowing when they will find employment again can cause a lot of concern.
You should ensure you have full knowledge of their legal payment entitlements and any extra they are entitled to as per their contract. Each contract and business differs but if your employees’ service length is more than 2 years of continuous employment then they will automatically qualify.
For those who are not required to work their notice period, they should receive full pay instead of this to cover the notice set out in their contract or the legal minimum requirements. You can also include unused holiday entitlement and any other earnings including bonuses and commissions. Any outstanding expenses should also be paid to them as soon as possible - the use of cloud HR software can be a good way to monitor this.
2. Voluntary Redundancies
You should always make the option for voluntary redundancies available. There may be some staff members who are in a better position to lose their jobs than others, or who would benefit from not working at this time. For example, they may be caring for vulnerable family members and the strain of this alongside working could be causing too much stress.
You can initially see if anybody is willing to volunteer but also be on hand to reject any applications to avoid losing vital staff and skills in the workforce.
You may also want to consider if any staff members are willing to take early retirement to avoid any redundancies at all.
3. How to Appeal
Everyone who had been given their notice of redundancy should be given the right to appeal. You don’t have to accept this appeal if you don’t wish to, but by clearly setting out the process from the offset, you can provide clarity to all those involved.
This process should be presented in writing to each of those you are making redundant. Although you can reject an appeal, every employee still has the right to take it to an employment tribunal if they believe the dismissal to be unfair.
It’s unlikely staff will appeal in the current circumstances as we’re all very aware of the financial strain every business is facing, but you should prepare for this eventually just in case.
4. Look into Alternatives
The best thing we can hope for is to create a plan to avoid redundancies altogether. If the resources are available, you should try to offer alternative employment options before making someone redundant.
This could be in the form of transferring your employee to a different branch, a different role, or even offering part-time work. If they accept, they should be granted a 4 week trial period; should it not be suitable, they can then opt for redundancy.
You could also cut costs throughout the business and for certain employees by proposing things like overtime bans or commission cuts. While some may find this acceptable, some employees may rely heavily on this extra income, so be prepared for this proposal to be rejected.
5. Be Fair
When making your selection process for redundancies, it can be easy to quickly become biased, particularly when considering employees you get on well with.
Be fair and consistent when considering employees by creating a pool of selection. A typical way to do so is by creating a scoring system for each employee depending on what attributes they bring to your business and their cost. The lowest-scoring is typically selected for redundancy.
By doing so, if you are brought to an employment tribunal, you can produce your selection process and this will be used to help determine if a dismissal is fair or unfair.
Notice periods should be given to all members of staff; the legal minimum requirements of length will vary depending on their length of service. 1 month to 2 years of service requires at least a week’s notice, 2 to 12 years requires a week’s notice for each year of employment, and anyone who has served 12 years or more must be given 12 week’s notice.
The decision to make redundancies is never easy for any employer, but by making sure you’ve considered every option, followed government advice, and brushed up on the legality and rights of each of your staff members, you can make the process as easy as possible.
In doing so, you’ll be protecting yourself and your organisation whilst also doing everything possible to make sure your employees leave on good terms.
Looking to develop your career? Consider starting today by signing up to gain one of our globally respected professional online qualifications.
It’s time to build your career.
Request your guide to getting qualified online in HR, accountancy, project management, GCSEs and more.