Making people redundant is never easy. We recommend that before you begin you speak with us. We have a wide range of documents on our website that will also help you. Your starting point should be our white paper Redundancy: Get It Right!. You can then use our search button to find our other resources covering redundancy.
For information about employment during the coronavirus pandemic, read also our blog on Coronavirus Questions.
Your staff are going to have a whole series of questions which you will need to address as you go through the redundancy process. We've pulled together some of the more important questions that you are going to be asked, and presented them for you here.
Questions are as might be posed by employees. The responses are from the manager's perspective and will need to be interpreted before responding.
Question: Can my employer lay me off?
Layoff is different from redundancy and it is very relevant when a firm suddenly has a reduced ability to trade. Under redundancy, there is a reduction in work of a particular kind, and the firm does not anticipate a recovery. Layoff is used where there is a reduction in work of a particular kind, but the employer anticipates a recovery soon and wants to keep employees 'on the books'.
The conditions of layoff should be set out in the employment contract for each employee.
There are various ways of 'laying off' staff. The obvious is genuine layoff. Here the employer reacts to reduction in need and sends employees home without pay. The other ways comprise differing forms of reduced obligation to work, with associated reduced pay. We set out several of these in the blog Managing to avoid insolvency.
Under layoff, the firm may have to pay a minimum pay and may breach the employment contract. Detailed analysis of each situation is needed before action is taken.
Question: What is furlough?
Answer: Furlough is a new word in the UK employment jargon, though it's commonplace in the US. Employees who are sent home because there is no work, but who will continue to be paid normal wages by their employer, are said to be furloughed.
Furlough is neither redundancy nor layoff.
Furlough may disappear as a term once the coronavirus emergency is over. Under UK Government management of the coronavirus emergency, the Government reimburses the employer via the taxation system.
Furlough needs no change to the employment contract, though the instruction to go home and any other information should be given in a letter.
Question: Can my employer just make me redundant at a whim?
Answer: Well, yes. And no.
Fundamentally, redundancies must be necessary - and managers must start their redundancy process by explaining why that is.
Redundancy (or office or facility closure or reduction in capacity) is a reaction to what's happening in the business environment. It's a reaction to what befalls the firm in its markets. It's a tactic available to managers to try to keep the business viable. Often the business environment causes some stress in the firm - perhaps the turnover is severely reduced - or the managers predict that the turnover will reduce sometime in the future. Sometimes, it's to consolidate business activities to reduce costs in line with reduced turnover. And indeed, it could simply be to generate more profit.
A necessary redundancy is one where managers, after due consideration of the business environment, deem removal of some jobs the only course of action available. Only managers can say what is and is not necessary, but they will be severely censured if cases go to tribunal and managers have not done their homework.
Managers should use a business plan to develop the case for redundancy.
They would typically be able to show that the firm is not viable if it remains as-is. They would typically use the business plan to show the options, with redundancies as the most obvious option. They have no need to make the business plan public, but they will need to share their reasoning when asked why by employees.
Of course, it is always in the firm's interests to employ the best people for the jobs, and hence the employer should always take a broad view when considering who could do jobs.
Question: I'm on furlough. Can my employer make me redundant without bringing me back to work?
Answer: Furlough is complicated. In essence it is just like you are off sick, or taking a sabatical or some other state other than your normal employment. So yes, you can be made redundant. And no, you don't need to be brought back for a time, though you will need to partcipate in meetings such as for consultation.
But your employer must follow the firm's normal redundancy procedure and the redundancy must be fair. Just because you are furloughed and someone else is working normally does not mean you would automatically be selected. A robust selection criteria must be used with the right people in the pools.
As regards what notice and redundancy payments you will receive, we suggest reading our blog on this topic at entitled About payments when making furloughed staff redundant. In summary, all statutory payments should be based on normal wages.
Question: I work in one facility. There is another close by. Should managers not consider all employees together in both facilities when considering jobs to go?
Answer: Well, it all depends on how unique the jobs are.
Jobs become unique when only one person in one facility could do the job - even considering re-training or re-induction in a new environment. Each facility may have a maintenance electrician for one example. That job might not be unique. Each may employ loom operators - but if each uses a very different type of loom, that job may be, arguably, unique.
And in principle, if employees could travel from home to either facility, or indeed if employees would be prepared to move house to be employed at the other facility, location ceases to be a characteristic defining uniqueness. In the example, the maintenance electricians on both sites would need to be considered in one pool whereas one group of loom operators would be safe and the other at risk.
Question: Can my manager make me redundant and hire someone new who is better qualified?
Answer: No, not to do the same job. If the manager elected to make a job redundant and dismiss the jobholder, then hire someone new to the same job, the dismissal would be unfair and hence not lawful.
However, a manager can elect that the business environment has changed, and that a new job is needed to service an evolved customer need. An example might be in a consulting firm. A low skill consultant may be replaced by a high skill consultant because the firm's clients no longer ask for low-skill work to be done.
In such an instance, the firm should offer the low skill consultant an interview for the new job, and the opportunity to train to improve their skills to fit the needs of the new job. However, often, the gap between new and old is too great and the low skill job and its jobholder must go.
This is a common tactic used by managers to adjust the firm's competitive advantage. It is sometimes combined with introduction of new complex technology.
Why doesn't my employer invite voluntary redundancy?
The simple answer is that voluntary redundancy is seldom a good option for the firm.
Voluntary redundancy is where the firm, on finding a need for jobs to go, invites jobholders to apply to be made redundant. The alternative, compulsory redundancy, would follow a process whereby employees can be told that they are dismissed (by reason of redundancy). The rest of the questions on this page concern compulsory redundancy.
Typically, voluntary redundancy is offered along with a sweetener to entice employees to apply. An example might be an enhanced redundancy payment. Voluntary redundancy is typically more costly for the firm.
The employer typically reserves the right not to be bound to accept applicants.
Cynically, it could be said that under voluntary redundancy, the people who apply and are accepted are those who can easily get a job outside the firm. Conversely, those left are the poorer performers, in turn weakening the firm and threatening its future.
So the only people who benefit from voluntary redundancy are those applying and who are voluntarily dismissed.
Often, firms start by offering voluntary redundancy, and then if they don't like who applies or they get too few applicants, they'll switch to compulsory.
Question: How long does my employer have to consult with me for?
Answer: You'll want the whole business to be over as soon as possible. Consultation is one of the longer elapsed time activities. The time for consultation depends on the number of employees to be made redundant.
Where less than 20 people are to be made redundant within a 90 day period there is no specified consultation period. The advice is ‘to begin in good time’. In order to follow a fair dismissal procedure we suggest that this consultation period is likely to be about three to four weeks long.
Where between 20 and 99 employees that made be made redundant within 90 days the consultation period is at least 30 days before the first redundancy takes place.
When more than 100 people are to be made redundant in a period of 90 days or less, then the consultation period must begin at least 45 days before the first redundancy. Failure to meet these obligations could result in a ‘protective award’ for each employee involved. This means you would have to pay out compensation if you rushed things.
Question: Will managers take seriously any suggestions I make during consultation?
Answer: There's a legal requirement for managers to consider any suggestions that employees make in order to avoid redundancies - so the simple answer is, yes, managers will consider all suggestions. There are always alternatives to redundancy. We list many in our paper Redundancy: get it right!
The problem when employees make suggestions is that the suggestions are often a bit superficial - simply because employees don't understand the whole picture. How could they - they are busy doing their jobs while managers do theirs. Employees generally don't get exposed to all the issues.
It's a legal requirement for managers to have a business plan that shows why redundancy will be a solution to the firm's ills. This could be shared with employees to improve the quality of employee suggestions.
Question: Do I have a statutory right to have someone with me during the meetings?
Answer: There is no statutory right for employees 'at risk' to have a companion for the initial meetings, however at the final meeting (which must be called by letter indicating that dismissal may take place) there is a right for the person to have a trade union representative or a colleague with them during that meeting.
Generally, however, we'd recommend that employees are allowed to have a companion in all meetings where they attend alone with managers. It's a daunting time and there's no reason to forbid this and every reason to allow it: managers must be sensitive in order to sustain the commitment of those remaining.
Question: Can I be made redundant and my work be picked up by someone else?
Answer: Where more than one person undertakes the same role and there is a requirement to reduce numbers of employees then those employees not selected for redundancy will take on all the duties previously undertaken by a large number of staff.
This is a huge issue. Asking employees not being made redundant to pick up work from those redundant will likely cause reduced commitment in those remaining. It may also heighten strain, which, if not managed, will lead to stress.
Be aware that if you make one person redundant and then employ another person within three months to undertake the same role, this will be in breach of redundancy regulations. In these circumstances the role is not actually redundant.
Question: My firm employs me and a few other employees in a team augmented by a number of contractors. The firm is going to make some of the employees redundant while retaining the contractors. Can they do this?
Answer: This practice of keeping contractors and making employees redundant is quite common and there are several explanations for it.
Firstly, if contractors are engaged properly, they will be on a contract for services and they will be delivering those services against a statement of deliverables. As such, they are like any other supplier. Their engagement will cease when their deliverables are complete.
Secondly, typically, contractors are engaged because they have very specific skills and knowledge not available in the employee group. And the firm has only short-term need of such skills and knowledge.
Thirdly, often, contractors are engaged by project managers in a firm. They are not employed through the HR department and hence are not on payroll and not covered by the firm's salary budget. They are often funded by a client contract.
All that said, some firms engage contractors because it's simply a quick 'hire' and equally quick 'fire'. Often they are just substitutes for employees. In that case it's for the firm to look to its morals if it keeps contractors on while making employees redundant. The firm should expect the commitment of those employees remaining to be damaged - and it might also get a visit from HMRC (pursuing undeclared taxes) if an aggrieved employee tips them they wink.
Question: My company employs me full-time and also employs a part-time person to do the same job I do. Why can't they just make the part-time person redundant and keep me?
Answer: Where several people undertake the same, or very similar roles, they must be put into a pool and everyone considered against the same criteria. Points are then awarded based on the criteria used and those with the least points are the people who will be made redundant. Making a part-time person redundant will potentially lead to unfair dismissal. Of course, if the firm needs a full time head to produce the outcomes required, and the part-time person refuses to work full time, that may be fair reason to dismiss the part-timer.
In a similar vein, taking a ‘last-in, first-out’ approach is likely to lead to dismissal being judged unfair.
If you are a manager and you have a general redundancy question, get in touch. We can answer your question and then share a generic response here.