How to deal with staff redundancies

Many small businesses are currently experiencing a hard time in the current economic climate. As well as worrying about your bottom line, you may find that you are faced with the difficult task of downsizing the business and having to make employees redundant.

This is not an easy decision to come to and the last thing that you'll want to be worrying about is whether you are meeting your obligations as an employer and following the dismissals procedure correctly. Equally, it's also important to attempt to ensure that the staff who remain in the business stay motivated in these challenging business conditions.

Making staff redundant can be necessary for a number of reasons brought on by the economic climate and if this is the case and there is no alternative but to reduce your workforce, there are a number of measures that you need to apply to ensure that you follow the fair dismissals procedure.

First, make sure you know your options. Layoffs and short-time working may suit your business better than redundancies so consider the alternatives to reducing your workforce permanently. But an important point is that there is no general statutory right for employers to take up this option. Whether or not an employer has the right to lay off an employee or put them onto short-time working is a contractual matter; in other words it depends on the terms of the employment contract (whether written, oral or implied).

If your firm is in a position where redundancies are the only option, you need to start the process with an idea of how many redundancies you expect to have to make. Whether you are making a group or just one employee redundant, a selection criterion needs to be established in order for you to make your decision. This criterion must be objective, non-discriminatory andapplied consistently across all the affected staff members.

If you expect to have to make 20 or more employees redundant you will have to hold a collective redundancy consultation with representatives of your employees. As part of this you should discuss the selection process, how redundancy payments will be made and ways to reduce the number of redundancies.

Once you have identified the employees you plan to make redundant you are able to start the dismissal procedure. In the case of individuals, you must write to each employee setting out the rationale for their redundancy and invite them to a meeting to discuss the proposed dismissal. For 20 or more redundancies, you must notify the Department for Business, Innovation and Skills and consult workplace delegates.

Redundancy payment
Be aware of the right of your employees to a statutory redundancy payment (SRP). If you fail to make an SRP, an employee can make a claim to an employment tribunal, and can also challenge the amount of pay you have offered. You will also need to prepare a written statement for the redundant employee which will highlight the amount of redundancy payment owed and how you worked it out.

People who have worked for many years in the same job or workplace can find redundancy a traumatic experience. Where possible, you should try to find ways of helping employees coming to terms with their situation. The practical and financial help you offer will, of course, depend on the size of your business and the seniority of the employee being made redundant, but in any case it is good practice to do your best to help employees find a new job.

For more information visit www.businesslink.gov.uk/employingpeople