A recent survey has found that almost half (42%) of employers plan to make redundancies. Why? Well, the ongoing cost-of-living crisis, the impact of Brexit and the rise in artificial intelligence are the most commonly cited reasons.
These external factors continue to put strain on organisations’ profitability and productivity – and there are no signs of that stopping soon, so it’s somewhat unsurprising that so many businesses are looking at ways to make cost savings and protect their long-term viability.
However, even in scenarios where making redundancies seems the only logical reason, an employer must follow a robust and fair process to avoid the risk of claims.
Kate Palmer, HR Advice and Consultancy Director at Peninsula, says “When it looks like redundancies may be unavoidable for an employer, it’s still important to exhaust all other options and not jump straight to making staff redundant. Failing to take into consideration and/or trial alternatives could lead to successful claims of unfair dismissal.
“Common alternatives may include halting overtime work and recruitment processes; agreement to reduce salaries or working hours; temporary periods of lay off or short time working; and removing discretionary bonus payments.
“If these aren’t feasible, where a business has identified that redundancy is their only option, they should complete full and fair consultation with affected employees and their representatives and adhere closely to rules on collective consultation. You might recall the backlash and damage to reputation faced by P&O Ferries when they dismissed 800 workers without prior warning: a stark reminder of the importance of compliance…
“If an employer is making 20 or more people redundant at a single establishment within a 90-day period, they will have to submit an HR1 form as notification to the Secretary of State. Failure to do so could lead to criminal fines and sanctions.
“Even when there are fair and genuine grounds for proceeding with redundancy action, claims can still arise if the process is not completed correctly. In fact, employers lose up to 80% of unfair dismissal claims because they have failed to follow fair procedures.
“All aspects of the selection process must be equal to all employees; this includes when deciding who should be included as being at risk of redundancy, developing the selection criteria to use and, ultimately, selecting an individual for redundancy. The selection criterion should focus on objective scoring, which can easily be justified by referencing other documents (e.g. the employment contract or appraisal forms).
“It should also not treat someone less favourably because of a protected characteristic, for example, an employee who has lots of time off due to disability should not have these related absences included in the scoring. Or an employee whose performance slipped whilst they were pregnant should not be disadvantaged. Doing any of these things may amount to discrimination.”