Redundancy Pack

Redundancy is a form of dismissal which usually occurs when the company (or a part of the company) cease trading, or are expecting to cease trading, or when the demand for work done by an employee or group of employees decreases (or is expected to decrease). Redundancies generally are the result of a business needing to save money, become more profitable and efficient, or introducing new technology

An effective redundancy procedure provides greater opportunities to reduce costs, increase profitability and efficiency, or simply remain trading in difficult conditions whilst minimising the risks from tribunal claims for unfair dismissal, breach of contract, or discrimination

This pack will provide you with all of the essential tools that you need to ensure that every employee in your business is treated fairly and with compassion in a redundancy situation, and that issues are addressed fairly and reasonably to ensure that your actions comply with current employment law

Why is this important?

Going through a redundancy process can be traumatic for all involved, including the ‘survivors’ and managers having to make people redundant. This toll on people’s mental health is not only detrimental to employee wellbeing, but can also create a significant cost to a business in terms of lost productivity, increased sickness absence, and poor engagement leading to lower motivation and poorer quality of work. Providing support and guidance throughout the redundancy process enables employees to feel safe that they are part of a fair framework, and that the company cares about their wellbeing, which improves engagement and motivation. If not managed properly, redundancies can create significant risk to the company from costly tribunal claims for discrimination, automatically unfair dismissal, breach of contract, and unfair dismissal

A recent successful tribunal claim for unfair dismissal resulted in a company having to pay an ex-employee £66,200for failing to use a fair selection criterion when making the employee redundant due to a downturn in the business. The company did not select a pool of candidates for redundancy, or use a scoring matrix to justify selection of the employee, and so could not demonstrate that they had managed the redundancy fairly or followed a fair process to dismiss the employee

Additionally, not managing redundancies in a fair and compassionate way can lead to various toxic situations for the company:

Damaging the company reputation and customer confidence in dealing with the company or referring friends/business acquaintances in the futureLost efficiency, productivity and profitability from decreased engagementDramatically reduced team morale & employee engagement, leading to increased disciplinary issues, grievances, and employee turnoverNegatively impacting the mental health & wellbeing of the remaining employees in the company who may now fear for their own job security, and have strong feelings about the unfair treatment of their ex-colleague

There is also a severe penalty for not dealing with redundancies relating to a disability (and other ‘protected characteristics’ as defined in the Equality Act 2010 such as pregnancy, age or sex) in a fair manner. For example, an employee being made redundant when they believe the selection scoring decision was unfairly weighted against their disability could result in a successful claim at an Employment Tribunal for direct disability discrimination. The compensatory award for such claims is uncapped and the company may also incur detrimental damage to its reputation