Peter Vreede is a contact of mine on LinkedIn. He has 25 year's experience as an HR professional and recently set up Redundancy Assist, supporting companies through the complex process of making their employees redundant during a company restructure. I had mentioned that I was looking for an article on how an organisation should handle possible redundancies in the current climate and he wrote this for the blog.
Redundancy is again a top issue for Directors as the recession bites. To downsize an organisation successfully and make it leaner and stronger is a challenging business transition.
1. Realisation
There is usually a collective realisation that the company will have to reduce costs/downsize and Directors start to discuss informally what are the best options. Emotions run high among everyone within the company when employees sense that the company results are not good and Directors are acting unusually. This early stage is difficult to manage and maintain confidentiality.
2. Outline Proposal
Agree an ‘Outline Proposal’ as no redundancy programme can be set in stone at this stage. Remember all documents may be required to be disclosed subsequently to an Employment Tribunal.
3. Planning.
Take extra time to get agreement and individual commitment from all stakeholders, and especially the Directors who will be meeting employees and their representatives to discuss the ‘Outline Proposal’. Lack of understanding of the law, fair process or perceived lack of commitment can be very disruptive.
4. Timing.
Directors almost always underestimate the time it will take from planning the reorganisation, through the consultation and dismissal stages, to successfully settling the company into its new structure. Less-haste-more-speed reduces potential long term damage and mishaps.
5. Announcement.
The day of the public announcement of the potential redundancies to all employees needs to be very carefully planned so that employees and managers recognise strong leadership, clarity and certainty. Directors and managers are likely to need careful briefing and training how to break the news effectively. Many mishaps can occur at this point, causing long lasting damage to the process, individuals and company reputation.
6. Consult & Communicate.
If the redundancy process is followed correctly Consultation is a two way process with no closed decisions, allowing everyone to give their opinion and objections. This can become complex if legalities such as ‘Bumping of an individual is envisaged.
Collective negotiations may involve external Trade Union officials or internally balloted representatives.
7. Selection and Fair Criteria.
The selection of specific jobs from a ‘Pool’ is the most fraught and emotional element of the whole redundancy procedure. Therefore be open-minded and do not discriminate. Disadvantaging individuals is best avoided by using agreed selection criteria that an Employment Tribunal will recognise is ‘fair’.
Be honest and fair minded. Reputations are quickly lost by inappropriate or unfair actions during such a sensitive time.
8. Procedure.
A fundamental part of the dismissal process is adhering to the Statutory Dispute Resolution Procedure (SDRP). If not followed it is likely that employees will cry ‘foul’ and may possibly hire a No-Fee lawyer to represent them. The results of a mis-managed redundancy programme can be protracted and expensive.
9. Payment and Dates.
Setting the date for each individual to leave will depend on their length of service, consultation period and the agreed severance terms. There will also be a mass of extra work to be completed potentially involving, severance payment calculations, contractual notice, pay-in lieu, car purchase, CGT, maternity leave, sickness absence, pensions, incentive & bonus payments, references, outplacement help etc.
10. Survivors.
Throughout the transition process keep in touch with your best talent.
If one person decides to leave this may unsettle others and you may have to re-recruit and develop a whole new cadre.
There will be a great deal of planning and work over many months to settle the organisation after the last redundant person leaves so that the company is re-energised and productive.
If you want more information on this topic you can Peter on 01524 702 002.
