At our virtual panel discussion a couple of weeks ago, we discussed how the current difficult economic climate means that some businesses are contemplating redundancies and/or restructuring exercises to put themselves in the best possible position to meet these challenges.
The good news is that, other than some of the well-publicised downsizing exercises in the tech sector, we are not currently seeing many large-scale redundancy exercises in the UK, at least not to the extent some may have been anticipating at the back end of 2022. Hopefully, this will remain the case now that the economic forecast is looking slightly less green around the gills than it did a few months ago, but the UK economy is a fragile flower and it would not take much, whether more strikes, food costs, wobbles in the banking sector or simply extended bad weather, for it all to wilt quite suddenly.
However, in case collective redundancies do become necessary (i.e. 20+ at one establishment within a period of 90 days or less), we thought it would be useful to share half a dozen of our Top Tips.
- Preparation, preparation, preparation!
One key point that has come out of many the redundancy exercises I have been involved in is that the success of a redundancy consultation exercise is directly related to the amount of preparation that goes into it beforehand. If the whole process has been properly thought out and the necessary documentation prepared, the entire exercise will run much more smoothly. Please remember, however, that pre-redundancy documentation may well be disclosable in proceedings or in response to a data subject access request, so do take care when writing anything in the preparation process which could make things awkward should it ever come before an Employment Judge! That means anything pointing to decisions having been made which should strictly be the subject of consultation still to take place. You can explain the basis for the proposed redundancies and the intended consultation process as a decision already made to discontinue a product or reduce output or introduce new technology, for example, but woe betide the employer whose internal emails or consultation proposals show that it has already decided how many of its employees must go as a result or, worse still, which of them.
Part of this preparation should usually include training the managers who will be holding the consultation meetings: if they only realise at the first consultation meeting that they do not know what they are doing, it is probably too late!
- Put together a Q&A sheet
It is worth thinking at the outset about how you are going to deal with any queries from employees who are put at risk of redundancy, especially where you are carrying out a large-scale redundancy exercise. Employees will inevitably ask some of the same questions and these will all need addressing. One way to deal with these proactively at the start of the process is to produce a Q&A sheet that answers all the general questions that employees are likely to raise, e.g. what is consultation?, how long will it take?, what will I get paid if I am made redundant?, etc. This can then be used as a working document that is updated as the company progresses through the consultation exercise.
This will also help save time during the process, as it will inevitably reduce the number of questions from employees. Otherwise, you may find that you make an initial announcement and within the hour you have dozens of emails all asking the same or similar questions.
- Ensure selection criteria are clear and address the challenges faced by the business
We all know that you should use selection criteria that are objective and job-related as far as possible, but sometimes this can be easier said than done. Ideally, the individuals running the business should be involved in selecting the criteria to ensure you retain those employees with the skills and experience you require in the business going forward – especially during difficult economic times when you might need to be more flexible to remain competitive.
It is common sense but also ensure your managers understand what you mean by the chosen criteria. For example, in an exercise we were previously involved in, the managers had chosen “skills and experience” and “performance” as part of the selection criteria. Whilst these could mean two different things: “skills and experience” could refer to qualifications and past experience and “performance” could refer to an employee’s performance in their current role, the managers carrying out the exercise were unclear what these terms actually meant and how they differed and it made it very difficult for them to carry out an effective exercise. They also struggled to deal with questions from employees when challenged about them.
Relatedly, ensure that the weighting you attach to your criteria properly reflects their actual importance to the business going forward. The reality may well be that if an employee has key skills, you will want to keep him despite some small disciplinary run-in or lateness issues in the last 12 months. However, if you simply score everything out of 4 or 5 (see below), then that very sensible preference may be defeated by simple mathematics when a poor but essentially irrelevant score on the disciplinary front outweighs or cancels out the vital skills criterion. And keep in mind also that for your selection to be defensible, it must be reasonably apparent how the final scoring is arrived at. You will need the ability to explain objectively what might be a very small gap in scores between the highest-scoring employee selected for redundancy and the lowest-scoring employee who is retained. If you score your criteria out of more than 5 at most (pre-weighting), particularly for non-numerical considerations such as team working, collaboration, use of own initiative, etc., you will simply not be able to justify months afterwards the difference between a 2 and a 3 or an 8 and 9. If it is that difference which puts one employee down and protects another, you will be badly exposed as a result.
- Take good notes at consultation meetings
This may sound like a trite suggestion, but it is amazing how often this is overlooked. Such notes may be necessary if you need to follow up on any points after the meeting, if the employee subsequently challenges anything that was said at the meeting or if the matter ends up in Tribunal.
In my experience, it is not a good idea to try and agree the notes with the employee because you can get bogged down in whether the employee said “could/should/may”, etc. Inevitably what you will get back from the employee is what he thinks he should have said with the benefit of reflection, and not necessarily what he actually did. The employee is clearly free to take his own notes if he wishes.
Some employers use a script/individual consultation record and this can be useful as a record of what was discussed. Again, remember that anything you write down is likely to be disclosable in any proceedings or in relation to a data subject access request, so keep it factual and civil – no jokes and no expressions of incredulity at his representations, please.
- Think about how things are going to look
As we discussed at the panel event, employees are increasingly willing to post comments publicly about their employer and their experiences at work. You can have policies and procedures in place to deter this, but these may not always be effective – especially if someone thinks they are on their way out anyway.
Clearly, employers should be primarily focused on complying with their legal obligations and making the right decisions for their business, but it is important to have one eye on how any decisions may be viewed, both internally and externally. Companies are increasingly scrutinised on decisions they take and the impact of them, especially when it comes to their people. This is particularly relevant to any companies seeking investment, as any such actions are likely to play into their ESG ratings. Everyone accepts that even the best-run employers may have to make redundancies from time to time, so there is no “ESG-shame” in that. However do steer clear of obvious cosmetic own-goals around notification by text message, locking staff out pre-announcement, hiding behind zoom calls and generally not being seen to treat your employees as human beings in their hour of need.
- Remember those who stay
Working at a site which has seen any substantial number of redundancies in the recent past leaves scars on the employees who are not, on this occasion, affected. They note how those dismissed are treated, what they are paid, whether the business dealt with them respectfully and emphatically, etc. What they see will inform their own longer-term decisions around whether your business is somewhere they want to stay on the one hand or cause them to be troubled by “survivors guilt” and fear of the next redundancy round on the other. Obviously you can never assure employees that they are 100% safe. That is particularly true while the consultation process is ongoing, such that some of those in the frame have at least the theoretical ability to talk their way out of it and drop someone else in instead. What you can and should do is explain to those who stay, at least as much as to those at risk, what is happening and why. If you treat them like adults and don’t just assume that because they don’t lose their jobs they will be grateful to you, that courtesy and respect will be reflected in their dealings with you.
