Common questions

Common questions about redundancy and managing the downturn

Q. I think I'm going to have to cut back the workforce. Should I tell people informally that an announcement is imminent before I write to them?

A.  You don't want to worry your employees unnecessarily but, at the same time, you want to explore all the options that are available to you and to them. As soon as you have made the decision to make redundancies, begin your conversations with employees. This enables your workforce to come to terms with the possibility of redundancy and provides them with the opportunity of coming forward with ideas which might reduce or limit the need for redundancies.

Q. Can I decide who is made redundant by their situation at home? I want to try and avoid making a family's main breadwinner redundant.

A. Even with the best of intentions, such an approach would be unfair on your other employees and potentially open you up to legal difficulties. You must adopt fair and objective selection criteria that are most suitable to your business and which ensure that the remaining workforce has the balance of skills and experience needed for your future requirements.

Q. Am I in trouble if I only make redundant those who work part time?

A. Not if it can be proved to be a reasonable response in the circumstances. For example, if the part time posts are the posts which are carrying out the work which has ceased or reduced, then it would be a reasonable response to consider making those posts redundant.

Q. I pay some of my employees cash in hand. What are they entitled to?

A. Assuming you have been deducting their tax and national insurance they need to be treated the same as all your other staff. If, however, they have worked for you on an ad hoc or project basis, the situation may be different. If they do not work exclusively for you, or are a consultant to your business or take responsibility for their own tax and national insurance they are not technically your employee and therefore redundancy need not come into play.

Q. One of my staff is about to go on maternity leave. Is it ok to make her redundant?

A. A mother has a legal right to return to her job after maternity leave. If she is made redundant immediately before taking maternity leave it may well be seen as discriminating against her for exercising her legal right to maternity leave. This opens you up to both a sex discrimination and unfair dismissal claim.

But if you can clearly demonstrate that her job is no longer needed by your business, by carefully following the guidance above it could be seen as reasonable within the law to make her redundant. However, if there is a suitable alternative job available within your company, you would be legally obliged to offer this to her in preference to anyone else. This applies even if the other person is more qualified for the alternative job.

Q. When I mentioned that there might be redundancies, one of my team said they were going straight to their lawyer. What can they actually do?

A. They can ask for advice in relation to the proposed procedure and potentially challenge the process. They may seek advice on making a formal grievance and if they are ultimately made redundant they may claim for example for unfair dismissal and/or discrimination in an employment tribunal. To do so, however, they would have to prove that the process has been mishandled.

Q. One of my staff has a disability. How can I make sure I don't discriminate against them in the redundancy process?

A. By making sure that the selection criteria used are not capable of having an adverse effect on them. For example, if you use attendance as one of your selection criteria you should be careful not to penalise an employee who has had to take time off work because of their disability. Using a range of criteria for selection should help make sure you are fair to everyone.

Q. Isn't it fairest to get rid of those who have been here the least time?

A. Whilst you do not need to give redundancy payments to employees who have been with you for less than two years, their length of employment alone does not count as fair criteria for making them redundant. A last in first out procedure may also be considered to be age discriminatory if it penalises the youngest employees. So you can use length of service as one of your criteria, but you should use other criteria too.

Q. There is only one woman in my company of five people and her job is the obvious one to go. Is this legal?

A. Yes, if it is clearly her job that is no longer required. But you will need to be in a position to demonstrate the rationale for her post being identified as redundant. Potentially she could claim sex discrimination and you would have to show that this was not the case.

Q. Can I give a better pay off to those who have been with me longest?

A. You will need to adopt a procedure that applies to all those being made redundant. If you are paying above the minimum required by law you will need a rational and fair mechanism in place for calculating enhanced payments. Age discrimination recognises that it is appropriate to reward employees for length of service when they have completed five years of service but you would need to justify this if challenged.

Q. Can I use redundancy as an excuse to get rid of employees who aren't very good?

A. Your criteria for redundancy should include aptitude for the skills required in your business which, assuming it is done fairly, provides an opportunity for keeping those staff whose aptitude most suits your business needs.

However, redundancy shouldn't be used as an excuse for getting rid of employees who aren't doing their jobs well - if this is the case in your business, you should follow competency procedures to dismiss them.

Q. I employ members of my family. Am I allowed to save their jobs first?

A. All employees must be treated fairly and equally so the law does not allow you to save people's jobs because of their status as family members. In many family businesses, however, family members also serve as directors or have additional management responsibilities. These skills, experience and attributes may be criteria that you consider are important for the future needs of your business.

Q. I don't think I have the cash flow to pay redundancy payments. What can I do?

A. If your business would become insolvent as a result of making the basic redundancy payments, you can consider seeking assistance from the Department for Business, Innovation and Skills (BIS) www.bis.gov.uk.  Assistance is available from its Redundancy Payments Directorate and Insolvency Service, though you will be expected to repay the debt as quickly as possible.

Q. I'm worried about what will happen to those who lose their jobs and how they'll cope. What can I do to help them realise it's not their fault?

A. You can provide them with a detailed explanation of the reason why your business needs to reduce its workforce which will demonstrate that it is not a reflection of their work. You may also want to consider offering them assistance in securing alternative work. This could range from paying for training for them in updating their CVs and interview technique to full career counselling.

Q. How can I write a good reference for someone if it is clear I have just made them redundant?

A. The fact that someone has been made redundant should have no bearing on their reference. Their reference will be based on their performance and should be a true, accurate and fair reflection of their work and not mislead a prospective employer. In times of economic downturn there is no shame in being made redundant. Likewise, there is no shame as a business in having to make people redundant.

To access the rest of Managing the Downturn, download or order a copy of the guide

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