Support for your business
Redundancy / Restructuring
If you are in a position where redundancies or reorganisation is required, you should seek expert advice in order to mitigate the risk to your business from disgruntled, departing employees. Restructuring may allow a business to protect more jobs, but unfortunately redundancies may become inevitable. Fail to prepare; prepare to fail.
Restructuring and redundancies can be difficult for both employers and employees so businesses should approach these processes with rigour and caution in order to minimise exposure to risk. Our team of Employment law specialists can guide you through the process with experience and focused acumen gained from a collective experience of more than 70 years assisting clients with issues such as these.
Restructuring
Restructuring your organisation may allow, where appropriate, for re-training opportunities so that employees who were at risk of redundancy can be redeployed. This is a positive step to affect organisational change that will ensure employees retain their jobs and give opportunity to grow and develop skills. Equally, this shows that the employer is acting reasonably and will minimise the risk of Employment Tribunal claims. When beginning a restructuring exercise, you may wish to look at the transferable skills of the employees in question and consider where there are positions elsewhere in the business that can be filled via re-deployment.
Restructuring usually occurs as a result of business growth, financial struggles and/or as a strategy to stimulate more growth. Whatever the reason for the restructure, employers will need to be careful about how they navigate the process.
Redundancy
The redundancy process is complex and can leave employers vulnerable to unfair dismissal claims in the Employment Tribunal by dismissed employees.
Before beginning the redundancy process, employers must consider the following:
- Why the redundancies are necessary (they should not be used to deal with concerns about an employees’ performance or conduct);
- The issues you hope to solve with redundancies; and
- Alternatives to making redundancies.
Here, we explain the stages that need to be followed when beginning the consultation and redundancy process.
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Announce the redundancy review
Employees should be informed as soon as possible that redundancies are a possibility and a meeting held with affected employees, not just those who are at risk. Here you should discuss: - Why redundancy is necessary; - The number of redundancies that are being considered; and - The next steps and what to expect Employees should also be informed of the above in writing. -
Select employees
How employees are selected for redundancy should be done fairly. If a whole team is being made redundant, the criteria will be obvious. However, if only a small number of employees are being made redundant, a clear set of criteria will need to be published. These criteria should be measured and objective. Employees should be scored fairly (with some demonstrable justification), with a view to eliminating any element of bias. It’s important that to avoid discriminatory conduct when selecting employees for possible redundancy. This can often be done accidentally, so careful consideration is required. -
Consultation
Where individuals are at risk, several consultation meetings should be held with affected employees in order to discuss why the employer is considering making their positions redundant and in order to discuss proposals for how to avoid redundancies. These issues should be given meaningful consideration and it is important that the employer does not pre-determine the outcome. -
Collective consultation
If a business is in a position where it needs to make 20 or more people redundant, it must follow a specific process, called “collective consultation”, where it consults with employee representatives. The business is not allowed to make redundancies for a set period of time during the consultation and must inform the Department for Business, Energy and Industrial Strategy that it is proposing to make 20 or more redundancies. During the process, the business should consider avenues to avoid redundancies and inform employees as to the reasons why redundancies are necessary. This process will often be held in tandem with individual consultation (as above). If your business is planning to make redundancies in the coming months, we would encourage you to seek legal advice as soon as possible, as there are a number of significant risks involved which could leave your business exposed to claims and can, with focussed advice, be avoided or at least, reduced. -
Employee rights
All employees who are being reviewed as part of the redundancy process are entitled to reasonable amount of leave to look for a new job or attend skills training. Employees with over two years’ service gain protection against unfair dismissal and the right to a statutory redundancy payment. Some employers have their own redundancy provisions which may allow for an enhanced redundancy package. In certain situations, employers may wish to alleviate the risk of a claim for unfair dismissal by offering enhanced redundancy terms in the event that the employee waives their right under a settlement agreement, to bring a claim. Our Employment Team regularly drafts settlement agreements and will always balance the interests of the business against the reasonableness for the departing employee. -
Redundancy pay and notice
Notice of redundancy is given at the end of the process. Where collective consultation has taken place, there is a set period of time which must elapse prior to notice being given. When giving notice, best practice is to provide this in person, and it should be accompanied by written notice.
Appeals Process
When giving notice of redundancy, you may wish to give the employees a chance to appeal the redundancy should they feel they’ve been selected unfairly. This is not a requirement but allows any issues with the process to be aired early and mitigates the risk of a successful Employment Tribunal claims.
Alternative Roles
As with when restructuring a team, you should always try to find alternative roles within the business for employees, or at least consider this alternative to redundancies. Look for transferable skills and vacant positions in other teams that the employee may be able to fill.
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