How To Get Redundancy Right
Karen Plumbley-Jones employment specialist, explains how to avoid the pitfalls.
Mass redundancies have been in the local news recently, as British Bakeries announced 150 job cuts in Plymouth and St Loye’s College in Exeter said that up to 50 jobs are under threat.
But what goes on behind the scenes when an announcement like this is made?
Imagine you’re the personnel manager at a company that employs 70 people making thermal underwear, selling to retailers. As a result of global warming and changing fashions, the company makes a loss for the first time in its history and the managing director decides that 30 jobs must go. How do you do this without getting taken to the cleaners?
The first step is to establish the reason for the redundancies and make sure you can prove it. Next, you’ll have to decide which departments need pruning and then choose your selection criteria. For example, if 12 people work in customer services and you only need 6, which ones should be made redundant.? Factors such as length of service, flexibility and time off sick can all be discriminatory and lead to legal claims.
At this stage, it’s a good idea to brief your PR department or agency and coach the MD on what to say. If the company is well-known, there’s bound to be press interest when the news breaks. You might also line up an outplacement company to assist workers in finding new jobs or retraining and you must notify the DTI or risk a £5,000 fine.
After that, it’s a matter of following the right procedure. If more than 20 redundancies are planned, you must consult with employee representatives for at least 30 days. If there is no trade union, staff can elect their own representatives. You’ll be discussing issues such as the proposed selection criteria, the timescale, the procedure and the level of redundancy pay. Consultation must be genuine and is a two-way process. If one of the reps suggests moving production to Vietnam to cut costs and starting up a mail order division to sell direct to the public, you’ll have to consider it. You must offer current vacancies to redundant employees.
At the same time, consult with staff individually and tell them the outcome. At the end of the process, you’ll give the selected employees notice of the termination of their employment and tell them of their right to appeal. Their redundancy payments should include any holiday accrued. Lastly you need to send them a P45.
With the cap on unfair dismissal claims rising to £60,600, unlimited compensation available for discrimination and up to 3 months’ gross pay payable to each employee if you do not consult with the reps properly, you should make sure you talk to your lawyers throughout the process to make sure you are getting it right.
For further information, please contact Karen Plumbley-Jones on 01392 685285
Published 21/02/2007.
