As the Investment bank, Credit Suisse, plans to cut approximately 2000 jobs at its London operation as part of a restructuring programme, many other businesses will no doubt be considering how to cut costs and will be in the unenviable position of having to consider making redundancies over the next 12 months.
There are many legal and practical complexities of implementing a redundancy process. No employer wants to have to make employees redundant but handling the process fairly and compliantly should ease the burden on everyone involved and protect the business from costly and lengthy employment tribunal claims.
A genuine redundancy situation
Firstly, the employer must show that there is a genuine redundancy situation.
A genuine redundancy arises in one of three circumstances:
- A closure of the entire business;
- A closure of the employee’s workplace;
- A reduced requirement for employees to carry out work of a particular kind.
Consultation and Selection
To ensure a redundancy dismissal is fair, the employer must follow a fair consultation and selection process.
At the outset of any redundancy exercise, employers must provide certain information to employees including why there is a potential redundancy situation, how many roles are likely to be affected and consider ways of avoiding compulsory redundancies.
Where 20 or more redundancies are planned within a period of 90 days, the employer has a duty to follow a collective consultation process which involves consulting with representatives of affected staff within minimum periods of consultation. In addition to any collective consultation requirements, individual consultation should take place with any employees selected for redundancy in order to discuss their particular circumstances.
When selecting employees for redundancy, employers must identify a selection pool of affected employees carrying out work of a similar kind and then score affected employees against transparent and objective selection criteria such as performance, skills and attendance.
Suitable Alternative Role
A fair redundancy process should consider whether there is any suitable alternative employment for potentially redundant employees. It is also important to remember that those employees on maternity/adoption leave are afforded special protection in respect of vacancies.
Termination payments
Once redundancy is confirmed, eligible employees are entitled to a minimum statutory redundancy payment, notice pay and payment for accrued but untaken holiday.
Meeting legal obligations is the minimum required of employers. Employers should not underestimate the reputational damage that may arise from a mishandled redundancy exercise. It is important to approach the situation sensitively and support everyone affected by the process including the employees at risk of redundancy, the managers giving the news and the remaining workforce. Careful planning and a clear communications strategy will help alleviate any risks to the business and protect the workforce.
Our Employment Law team have significant expertise in advising on the redundancy process. If you have any queries relating to the redundancy process please do contact us on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.