With the UK currently experiencing a recession, this unfortunately means that redundancies are starting to become more prevalent as businesses struggle to stay afloat. According to data from the ONS, the rate of redundancies increased to 3.4 per 1,000 employees in September to November last year.
Redundancy is a difficult decision to make, and is usually the last resort for businesses that are attempting to save enough money to continue operating. Ultimately, making redundancies will never be an entirely positive decision, however, there are ways to make the process easier for both the employer and employee.
Commenting on the need for redundancies, Connor Campbell, business finance expert at NerdWallet said:
“Recessions bring a lot of financial pressure and uncertainty for businesses, meaning that business owners are often forced to make difficult decisions to keep their costs down.
“One of these decisions is redundancy, often seen as the last resort if nothing else has worked to bring running costs down and keep the businesses’ books balanced. In most cases, business owners try to avoid redundancies as much as possible.
“Unfortunately, redundancies aren’t always avoidable, and they ultimately leave employees without employment during a time of financial hardship. Naturally, this makes the process of determining which employees to let go quite difficult, as it’s likely to be an emotional topic for staff members that are now facing further financial pressures.
“When it comes to making people redundant, there is no perfect way to make this decision. However, business owners should do their best to determine which employees are made redundant in a fair and objective manner.”
To help business owners navigate how to approach making employees redundant in a fair and legal manner, Connor has shared the following tips:
- Make a fair decision
The decision to make a member of staff redundant ultimately falls on the business leader themselves. However, candidates for redundancy should be chosen fairly, rather than based on personal feelings towards employees.
Business leaders should consider the skills the employee brings to the business and the level of expertise they hold. They should also think about how well the employee is able to do their job and the results they generate. If an employee has a history of disciplinary action taken against them, they might be more likely to be considered for redundancy. Similarly, if an employee has had issues with their attendance in the past, this might also be a factor that influences whether they should be considered for redundancy.
- Avoid unfair dismissal
Similarly, although business leaders may have taken careful and fair consideration as to who to make redundant, there are several pitfalls that they should avoid that could potentially be considered unfair dismissal. These include basing decisions on employees’ individual circumstances, such as:
- pregnancy or maternity leave
- taking parental or adoption leave
- being an employee representative
- having a part-time or fixed-term contract
- joining or not joining a trade union
- pay and working hours, including requesting to be paid National Minimum Wage
- taking annual leave
- opting into the Working Time Regulations
Likewise, redundancy decisions cannot be made based on any of the protected characteristics: age, sex, sexual orientation, gender reassignment, being married or in a civil partnership, pregnancy or maternity leave, disability, race, religion or belief.
- Give your employees the correct amount of notice
Once business leaders have determined which staff members they will be making redundant, it is important that these employees are then given at least the minimum statutory notice period.
This notice period increases depending on the length of their service, with one month to two years of service requiring at least a week’s notice, two years to 12 years of service requiring one week’s notice per year’s service, and over 12 years of service needing 12 weeks’ notice at minimum. During this notice period, business owners must continue to pay employees based on the amount they earned during the 12 weeks prior to being given notice of their redundancy.
