How to handle redundancy - a guide for employers
How to handle redundancy – a guide for employers
Making people redundant isn’t easy, regardless of how many times you do it, how many employees you are letting go and how little or long they’ve worked for you.
According to the CIPD’s Labour Market Outlook published last month (November), redundancy intentions currently remain low, but are rising. The stats show that 16% of employers plan to make redundancies by the end of the year. For the previous quarter, the figure stood at 13%.
Are you among the 16% of employers who have already made redundancies or are faced with making them between now and the end of December or at some point next year? Take a look at the Q&As below for a practical overview of some of the main issues employers should consider when handling redundancy.
Q. ‘Is redundancy the only option?’
A. Redundancies are usually made in relation to positions that are no longer needed. As a result, best practice guidance states that employers should only consider making staff redundant if part or all of their company is:
- Closing or has already closed
- Changing the type or number of roles required to deliver certain work
- Moving to another location
Employees cannot be made redundant because their employer has concerns about their conduct or performance at work. These issues should be resolved via the disciplinary or conduct/capability route.
However, if you can answer ‘yes’ in response to the three points listed above, and believe redundancy is a possible option for you, ACAS recommends asking yourself the following questions before taking any action:
- Are the redundancies necessary and, if so, why?
- If I make people redundant, which issues will it solve?
- Are there any other options you could pursue instead?
Q. ‘What other options can I explore?’
A. Ideally, redundancies should be a last resort. It may seem that redundancy is the only solution, but in reality, there are several alternative options, which employers are strongly advised to explore before doing anything else. Alternative options include:
- Offering voluntary redundancy
- Changing employees’ working hours
- Moving them into other roles
- Letting temporary or contract workers go
- Limiting or removing overtime
- Putting a hold on hiring new employees
Q. ‘How do I tell employees they’re being made redundant?’
A. You ideally want to notify employees as soon as possible; from the moment you’re considering making redundancies.
The most transparent and effective way to do this is by holding a face-to-face meeting with them. Make sure everybody who is potentially affected is invited and can attend. At the very least, the meeting should cover:
- Why the risk of redundancy is happening
- How many roles have been earmarked for redundancy
- What happens next
- How employees will be consulted
At this stage, if you already know certain employees are at risk of redundancy, you must confirm it with them in writing and be clear about:
- The fact they’re at risk of redundancy
- If they have other options, such as taking voluntary redundancy
- How you plan to consult with them over the coming days, weeks or months
Q. ‘How much notice do I need to give staff?’
A. By law, employees who are being made redundant are entitled to a notice period. They should be informed of their notice and final leaving date after the consultation process has been completed.
The length of notice staff are entitled to receive depends on the number of years they have worked for their employer for. The current Government guidance on this is:
Length of service | Notice period employers must give |
One month to two years | At least a week |
Two to 12 years | A week’s notice for every year they have been employed for |
12+ years | 12 weeks |
Q. ‘How much redundancy pay are employees entitled to?’
A. Staff who are made redundant are entitled to receive redundancy pay, which is also referred to as statutory redundancy pay. In order to qualify, employees must:
- Have an employment contract
- Worked for their employer for at least two years
- Have been made redundant, i.e. staff who take early retirement aren’t eligible to receive redundancy pay
Employees are entitled to receive their redundancy pay at the point they are dismissed from a company or as soon as possible after that.
How statutory redundancy pay is calculated
Not everybody receives the same amount of statutory redundancy pay. It depends on how old they are and how long they have been working for their employer for:
Employees’ age | Statutory redundancy pay |
Up to 22-years-old | Half a week’s pay for each full year of employment |
Over the age of 22 | A week’s pay for each full year of employment |
41-years-old and over | 1.5 weeks’ pay for each full year of employment |
Five other facts about statutory redundancy pay:
1. Length of service is capped at 20 years.
2. Weekly pay is capped at £571.
3. Employers can give their employees extra redundancy pay.
4. They can also choose to give employees who’ve been with them less than two years redundancy pay.
5. Employees are entitled to dispute their redundancy payment amount within three months of their end date.
Note – if you’re unsure about how much statutory redundancy pay your employees are entitled to receive tools, such as the Government’s redundancy pay calculator, are designed to help.
Q. ‘How can I help my employees during the redundancy process?’
A. Handling redundancies can be challenging for everybody involved. However, there are certain things employers can do to help make the process that bit more manageable for their staff.
Five ways employers can support employees going through redundancy
1. Provide them with access to counselling.
2. Hold regular face-to-face meetings with them.
3. Help them seek financial advice.
4. Be clear and transparent about their redundancy plans.
5. Let them have time off to apply for other jobs and/or attend training.
We hope you’ve found this article useful. The list of questions we’ve covered is by no means exhaustive, but will hopefully provide you with some initial valuable guidance in terms of what may potentially lie ahead.
For advice on staff redeployment and upskilling/training, get in touch with us. We’re more than happy to provide you with impartial advice and share guidance on some of the ways your employees can continue with their careers after being made redundant.