Handling Employees

Redundancies &
Exit
What is Redundancy?
Redundancy Definition:
 Redundancy is when an employee is asked to leave or laid off if there is no work.
Redundancy is one of the reasons for the dismissal of a person's employment under fixed-
term contract. When a work does not exist anymore or has got diminished, the employee
may be removed of his employment which is under a fixed-contract, called as Redundancy.
The non-existence may be attributed to lack of projects or funds for research have stopped
flowing into the system etc.

• Termination of employees for business reasons, such as poor economic conditions.

• Redundancies can be forced or voluntary – in the case of voluntary redundancies there are
usually incentives offered to outgoing employees, such as extended garden leave or more
valuable severance packages.
• Voluntary redundancies are designed to prevent the employer having to choose who to
terminate.
What is Redundancy?
• Redundancies can be controversial, particularly if businesses must select who is to be made redundant.

• A commonly-used technique is Last In, First Out (LIFO), whereby the employees who have joined most recently are
considered first for redundancy. This in itself is controversial; critics say it disadvantages young workers who will
inevitably have less-established careers.

• Redundancies are typically preceded by consultations, which are collaborative efforts between employers, employees
and other stakeholders into ways the business can save the role from redundancy through new opportunities or
restructuring.

• Employers may legally be required to consult for a certain period of time although this often depends on how many
employees are at risk of redundancy.

• When multiple people are at risk of redundancy, the correct term is collective redundancy.

• Common euphemisms for redundancy include ‘downsizing,’ ‘delayering,’ ‘excess reduction,’ and ‘strategic restructuring.’
Reason for Redundancy
 Reason for Redundancy

A redundancy usually happens because of discontinuance of business on or off the

employee's site or a reduction of work or relocation of the business to a new location
or change in the business processes leading to the removal of employment.

This usually impacts the morale, productivity and motivation of other employees as
well.

In nutshell:
The redundancy process is a complex combination of rights, requirements and HR & legal
risks for employers and the specific area of redeployment rights is no different.
Importance of Redundancy
• The concept of redundancy procedures holds good amount of importance in
the establishments.

1. Firstly, it highlights the importance of having contracts in a firm. The

contracts actually decide the amount to be paid to the employee being
asked to leave according to the extent of the breach of contract by the
employer side. Also if the employee has ever breached a contract that can
also prove to be beneficial to the employer while deciding about what to
be done with the employee.
2. Secondly, redundancy procedures should actually hold a selection criteria,
for example last in first out.
Process Of Redundancy
 Going through a redundancy process can be stressful, and doing so without following the law could lead to
expensive penalties.

Thorough consultation with all those at risk, and continuing to look for alternative options to redundancy
throughout, are essential steps to getting things right.

• Step 1: Be clear on your reasons

• Step 2: Determine which roles will be placed at risk of redundancy
• Step 3: Let people know their post is at risk of redundancy
• Step 4: Draw up a selection criteria
• Step 5: First individual consultation meeting
• Step 6: Selection criteria scoring
• Step 7: Second consultation meeting
• Step 8: Consider alternatives
• Step 9: Final consultation/redundancy dismissal meeting
• Step 10: The right to appeal
Handling Employee Redundancy
• When organizations find that they have surplus staff it does not automatically
lead to redundancy.

• The circumstances leading to the surplus will vary. In the event of the closure of
an organization redundancy is inevitable.

• However, there are other ways of handling staff surpluses which may avoid
redundancy, or compulsory redundancy, or at least reduce the scale of
redundancy.

• Much will depend on whether or not a fall in demand or financial problems are
temporary or not and if not for how long.
 Ways of Handling Surplus
Staff
• Devices for retaining surplus staff include re-deployment, short-time working, temporary lay-offs and
temporary closure.
• The obligation to continue paying staff their salary is likely to remain unless there is provision within the
employment contract to temporarily reduce working hours.
• Some organizations have recently negotiated pay cuts – the logic being that staff would rather have
reduced pay levels than no job at all.
• Organizations used to cyclical fluctuations in the demand for their product or service may have well
established procedures giving an understanding about how to handle a temporary fall in demand.
• However, this may be a much more problematical issue for organizations facing such issues for the first
time.
• Problems can include:

a) staff expectations
b) lack of representative structures
c) lack of procedures and agreements for handling variations such as temporary closures and-offs, and
pay reductions.
 Ways Of Handling Employee Redundancy
1. Consultation:

• Employees are generally entitled to be consulted about redundancy on an

individual basis – there are though some exceptions with collective
redundancies.

• This should be done as early as is practicable and should be genuine, as

opposed to just going through the motions.

• Such consultation should include possible ways of avoiding the redundancy and
also examination of the opportunity for alternative work within the organization
 Ways Of Handling Employee Redundancy
2. Selection

• Selection for redundancy will normally be in accordance with a previously established policy
which may also have been agreed with recognized trade unions.
• If there is no agreement there should at least be consultation with employee representatives
about the criteria for redundancy selection.
• Length of service is likely to be an important factor in deciding who should be retained and who
should be dismissed, but other criteria, including capability, may need to be considered as well.
• To simply choose on the traditional basis of "last in, first out" could be age discriminatory.
• Objective data may be necessary to demonstrate that selection criteria have been fairly applied.
• This may need to include data about individual performance.
• Employees are entitled to four weeks' trial in an alternative job without forfeiting any of their legal
rights. However, staff will not retain their legal rights if they refuse offers of reasonable alternative
work
Ways Of Handling Employee Redundancy
3. Compensation
The statutory minimum redundancy payments that employers have to make in the UK
to employees with a minimum of two years service with them are:

•for each year of service under the age of 22 – half a week's pay;
•for each year of service at age 22 but under 41 – one week's pay;
•for each year of service at age 41 or over – one and a half week's pay.

A complication for employers with cash flow problems is that the cost of redundancy
payments may aggravate their financial position.
Another issue is that if the employer makes too many people redundant they may have
to re-hire or recruit other replacement staff, in order to cope with an upturn in activity.
Ways Of Handling Employee Redundancy
4. Notice
• The notice entitlements of those being made redundant will be according to
the contracts of employment which need to conform as a minimum to
statutory rights.
• In the UK the minimum statutory provision is a week's pay for every year of
service up to a maximum of 12.
• A complication can arise with people wishing to leave early in order to accept
another job while it is on offer but still retain their right to redundancy
payment.
• Employers may want to look at this on a case-by-case basis and consider how
necessary it is for the person to complete their notice period.
Ways Of Handling Employee Redundancy
5. Training and Support
• The organization of training related to redundancy has to be carefully timed.
• If it is done too early it may cause unnecessary panic – especially if redundancy is
not necessary after all.
• If it is arranged too late the organization may have been overtaken by events. A pre-
requisite may be a review of organizational policies and procedures regarding
redundancy so that those involved in implementing them can be properly briefed.
• There may also need to be some inter-personal skills training so that managers are
equipped to handle redundancy discussions, both individual and collective.
• Training may be necessary for those involved in handling internal appeals and
employment tribunal proceedings.
• Training and support may also be necessary in setting up representative systems to
discuss collective redundancies where there is no trade union.
Ways Of Handling Employee Redundancy
6. Redundancy Survivors

• A key aspect of support that is often missed is that which is needed for the
organizational survivors of redundancy.

• The experience of witnessing and perhaps helping implementing a

redundancy may have shaken the confidence of remaining staff, particularly if
they fear there may be further job losses.

• It may be very important to keep survivors, especially those in key

management positions, in the picture about future developments.
 Ways Of Handling Employee Redundancy
7. Future Challenges
• Sadly the scale of redundancy has greatly increased.
• It is important that the individual misfortunes that this may involve are not aggravated by poor handling of
the process.
• Those implementing redundancy need to have a good grasp of whatever policies and procedures have been
put in place for handling it.
• Unfortunately, redundancy is now often affecting organizations and managers with little relevant experience.
• This may be aggravated by a lack of appropriate policies and procedures.
• This makes timely training all the more important. As well as training and briefing about relevant substantive
issues, managers may need to develop their inter-personal skills in order to cope with what can be very
fraught meetings and interviews.
• The internal and external reputation of an organization may be critically affected by the way a redundancy is
handled. The needs of redundancy survivors may also be important. Employees caught up in redundancy may
also have training needs. As well as being briefed about their rights and entitlements they may need training
for re-deployment or to help find other work.
• Finally more strategic training and development may be necessary to help an organization face up to future
challenges, such as the danger of further down turns in demand.
Five Legal Tips Considering Redundancies

1. Redeployment – Assume Nothing

• Many employers make assumptions about an employee’s willingness or

ability to undertake a vacancy within the business.

• An employer may assume the job is too junior, pays too little, or the
employee does not have the requisite qualifications and experience etc.

• So a vacancy is neither offered nor discussed with the employee.

 Five Legal Tips Considering Redundancies
2. Understand the ‘consultation’ obligations

• For instance, the model Modern Award consultation term regarding major workplace change doesn’t require
employers to provide their staff with an opportunity to change a definite decision regarding redundancies. This
is because there is (despite the name) there is no obligation to consult with employees about the changes,
only an obligation to discuss them (this must happen before the change is implemented).

• However, if an Enterprise Agreement includes an obligation to consult about changes, then an opportunity to
persuade the employer to revoke or modify its proposed decision should be provided.

• Additionally, the Fair Work Act includes further consultation obligations which sometimes apply. Employers
proposing to make 15 or more employees redundant will need to consult with unions if one or more
employees are union members and the contacted unions are entitled to represent employees’ industrial
interests.

• The Fair Work Act includes further obligations to notify Centre link where there are 15 or more redundancies.
Five Legal Tips Considering Redundancies
3. Check selection criteria doesn’t indirectly discriminate

• Employers should check that the selection criteria for deciding who would be
made redundant does not indirectly discriminate.

• The classic example here is making all part-time or casual employees redundant
in the first round of redundancies.

• Sometimes the demographics of a workforce can be such that a higher

proportion of part-time and casual employees are female (whereas a higher
percentage of males work full-time).
Five Legal Tips Considering Redundancies
4. Support

• Not all employees will react the same way to the news of redundancy. Some may
be thrilled at the prospect, others may be worried about supporting their families
and meeting financial commitments. Some employees may just want to be left
alone.
• The best strategy is to be as flexible and supportive as possible. This may include
allowing employees time off work to attend interviews. It may also include
supporting employees via assistance programs and outplacement services.
• Anecdotally, employees who feel supported during the redundancy process are
more likely to advocate your brand. They may also be less inclined to litigate.
Five Legal Tips Considering Redundancies
5. Get help early

• If you feel you’re out of your depth, it’s a good sign that you probably are.

• There are so many potential pitfalls with redundancy. And there is a

significant body of case law about them.

• It’s best to get good advice early. It could save your business much
heartache and expense later.
Thank You !!!!