Neil Dwyer, partner & head of the employment team at Hay & Kilner Solicitors, offers advice on managing a redundancy programme.

Recent research shows that more than 60% of small and medium sized businesses are now suffering financially due to the credit crunch and the move towards recession. Those not suffering are relying on savings and overdraft facilities to fund cash flow.  Certainly, redundancies are on the increase. During a redundancy programme, employers need advice and support in carrying out what can be a complex and emotive process.

Like Sat Nav, the best journey involving redundancies is one where the employer has plotted each milestone in the journey and knows where the road ends.  Potential problems that damage later milestones need to be addressed at the outset so that the process can be well thought-out, objective and successful. 

At the outset, a business will calculate the bill for contractual and statutory payments – statutory redundancy pay and any payment for notice if the employee is not required to work the notice. It is important to ensure that this bill for the obligatory payments is not increased two or three fold by making expensive mistakes in the journey which will result in the business making additional compensation payments.

Potential potholes could come from:

• Not informing employees ahead of any necessary period of consultation about any redundancy proposals and failing to ensure that they are mere proposals at that stage and not final decisions.
• Failing to allow a 30 day consultation period before any notice of redundancy is given when more than 20 employees are to be made redundant.
• Drawing the pool for selection too narrowly and keeping staff out of a pool just by reference to job title and failing to conduct a comprehensive analysis of their duties.
• Failing to ensure that the selection criteria is objective and verifiable by reference to data such as records of attendance and efficiency and failing to ensure that it is not discriminatory.
• Including unpopular or difficult employees in a redundancy process unfairly.
• Using “last in, first out” as a basis for selection when this can discriminate against staff by reason of their age or sex.