Five-Step-Guide for Managing a Redundancy Process

The unexpected and unwelcome arrival of COVID -19 has forced many organisations to make sudden changes to their workforce. Despite on-going government support, redundancy is an unavoidable necessity for some organisations at this time.

The potential for roles to be made redundant can understandably have an adverse impact on the mood, morale, and motivation of your employees. One survey found that 73% of survivors felt demoralised, 64% felt demotivated, and 74% said they shut down and turned off. This survey however was not in the context of a pandemic when people are already naturally fearful and anxious, never mind being faced with loss of employment.

In this article and our upcoming webinar, Think People Consulting will introduce you to a step-by-step process to firstly ascertain whether redundancy is the next necessary and lawful step, to ensure lawful implementation of redundancy, and then to mitigate the adverse effects redundancy may have on the employer, those made redundant and the remaining workforce.

What is Redundancy and when is it lawful? 

Redundancy is a lawful dismissal that occurs when an employer needs to reduce the size of its workforce.  According to the Employment Rights (NI) Order 1996, an employee may lawfully be made redundant when: 

• the employer has ceased, or intends to cease, continuing the business for the purposes of which the employee was employed by them; or
• the requirements for employees to perform work of a specific type, or to conduct it at the location in which they are employed, has ceased or diminished.

Remember, it is the job being made redundant and not the individual. The individual should only be affected due to the fact that the job no longer exists and therefore poor performance, absence or conduct are not a valid reason for making a role redundant. 

The Redundancy Process

1. Identify ‘Selection Pools’

Employers should identify “selection pools” - groups from which employees will be selected for redundancy.  Depending on the cause for redundancy, selection pools may be compiled based on:

• those who undertake a similar type of work;
• those who work in a particular department;
• those who work at a relevant location;
• or those whose work has ceased or been reduced (or is expected to do so).

Grouping employees into selection pools should be given careful consideration.  For example, where a role or a function disappears, identifying a selection pool is normally straightforward; everyone from the redundant role or function will be included in the pool for selection.  However, if similar roles exist in different departments or in different teams these must also be considered.

2. Can you offer voluntary redundancy?

Offering voluntary redundancy can avoid or decrease the need for compulsory redundancies.  Whether this is a feasible or appropriate option will depend on the circumstances of the given employer and workforce.

Employees who volunteer to be made redundant are still legally considered to have been made redundant. They have the same rights as those facing compulsory redundancies, including the need for a consultation.

Organisations have the right to decline a request for voluntary redundancy on the basis of business need or cost.

3. Meet your obligations for consultation

You should consult all employees individually to explain the requirement for redundancy, the process which will be implemented, and to provide an opportunity for employees to pose questions and alternative proposals.

Using digital platforms is an acceptable means of consultation, particularly if an employee is not currently at work (e.g. on furlough) provided full allowance is made for an employee’s right to be accompanied.

When an employer plans to make 20 or more employees redundant at one establishment within a 90-day period, it is considered a Collective Redundancy. A Collective Redundancy Consultation then needs to be carried out. Failure to carry out collective redundancy consultation can result in affected employees claiming a protective award from an industrial tribunal.

Collective redundancy legal requirements:

• Employers must complete Form HR1 which can be found on the Department for the Economy (DfE) Website.
• Consult with workplace representatives. These may be either trade union representatives and/or elected employee representatives for those employees not represented by a union. If your employees choose not to elect employee representatives, you must give the relevant information directly to each individual.

4. Carrying out fair and non-discriminatory selection

After the consultation period is complete, you will need to select individuals for redundancy from within the selection pool. These choices must be based on objective criteria such as, work experience, performance records, disciplinary records, skills, competencies and qualifications, and attendance records. The Employment Tribunal’s favored method of selection appears to be those based on a point system, which scores each employee against the relevant criteria. 

Note on Furloughed Employees: In today’s circumstances, when many employees are on Furlough, if an organisation is proposing to select staff for redundancy based purely on the fact that they are furloughed, there is a risk that this approach may give rise to an unfair or even discriminatory redundancy process and/or dismissals. The extent of the risk will depend on the reasons for staff having been placed on furlough in the first place, and the selection process that was used.

Northern Irish employment law requires employers to follow the statutory dismissals procedure during any redundancy process where a redundancy has been made.

5. Alternative Roles

An employee is not entitled to a statutory redundancy payment if they unreasonably refuse suitable alternative work. Employees are entitled to a four-week trial period within the new role and if the employer and employee agree that the role is not a suitable alternative, the employee reverts to being redundant.

The law requires those selected for redundancy to be given paid time off to look for work during the final notice period.

In Summary

Redundancy can be a very traumatic time for individuals. As an employer you have the responsibility to implement redundancies fairly and respectfully.

One thing is certain: taking the time to do things correctly will protect your reputation as an employer and provide you with a stronger case should you be challenged on the dismissal. Even the most well-planned process will encounter obstacles and issues as it moves through. Making it your utmost priority to handle these issues carefully and fairly, with a well-documented reasoning and process, while ensuring you have access to HR experts with adequate redundancies experience, will limit any potential liability over time.