Reorganisation, Redundancies and selecting employees for Redundancy

Updated: Apr 24, 2020

Redundancy is one of the most traumatic events an employee may experience.

The announcement of redundancies will invariably have an adverse impact on morale, motivation and productivity.

PLANNING & COMMUNICATION - the watchwords of good redundancy


What is Redundancy?

A person is dismissed by reason of redundancy if the dismissal is due to the fact that the employer :

Is ceasing or intending to cease to carry on the business or

Is ceasing or intends to cease to carry on the business in the place where the employee was employed or

Has a reduced requirement for employees to carry out work of a particular kind.

The Legal Position

Both statute and case law determine redundancy obligations and rights. The main legislation governing redundancy includes:

The Trade Union and Labour Relations (Consolidation) Act 1992

The Collective Redundancies and Transfer of Undertakings (Protection of Employment) Regulations 1995 (SI 1995/2587)

The Employment Rights Act 1996

The Collective Redundancies and the Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999 (SI 1999/1925)

The Collective Redundancies (Amendment) Regulations 2006 (SI 2006/2387).

Managing a Redundancy

Planning and Communication - the watchwords of good

Redundancy management, taking into account all legal requirements

and consultations.

To effectively manage a redundancy process you need to:

Plan ahead –set a timeline- train and support managers

Communicate effectively

consult employees

Identify a selection pool and use objective selection criteria

Consider suitable alternative employment for “at risk” employees

Ensure a transparent and fair procedure is followed at all stages

Provide counselling and support to “leavers”

Look after the survivors

Comply with all legal and “best practice” requirements

Planning -

Establish formal procedure on redundancy

Where you are using an external outplacement provider, get them involved early.

Ensure that senior managers are committed to the change.

Train Managers to handle redundancies with sympathy and clarity.

A well-designed redundancy programme should enable employees to refresh their interview skills, redraft CVs and reply effectively to job advertisements.

Keep everyone motivated throughout the uncertainty of change and help leavers to find new work while at the same time achieving re-engagement from disenchanted survivors.

Plan ahead - Although the pressure to make quick job cuts may be intense, step back and think about how best to retain business critical skills and people, without generating unfair dismissal claims.

Set a timeline -As far as possible, create a clear timetable of events and stick to it. The more clarity you can provide during this time of uncertainty, the less people will be prone to panic.

Support managers - Brief line managers and supervisors ahead of making any announcements and help them to develop answers to any questions they anticipate being asked by employees.

Communications with staff-

Provide reassurance

Don't assume that those employees not directly affected by redundancy won't take fright and take flight. Encourage the senior management team to reassure critical people.

Communication should be formal and regular, whether delivered via news bulletin or face-to-face. Even if you have little to say, say it.

Any silence is likely to be interpreted as the worst-case scenario, impacting negatively on morale and productivity.

Redundancy involving more than 20 employees - the employer must complete form HR1 and send it to the Department for Business, Energy & Industrial Strategy (BEIS)

Breaking the News

Explaining the process

When announcing redundancies, create a clear and consistent message to relay to staff and bear in mind that the reaction of most people will be to panic and assume it will affect them.

Clearly explain the business reasons behind the decision to make the redundancies, the selection criteria to be used, the timelines involved and severance arrangements

Seeking volunteers

Once need for redundancies has been identified and careful planning has taken place, offer a voluntary redundancy package – this may avoid compulsory redundancies altogether.

Consulting employees

Collective consultations with recognized trade unions or elected representatives - at least 90 days beforehand for dismissals of 100 or more employees and at least 30 days before notification of redundancies for 20 –99 employees.

  • Consultation must be full, genuine and meaningful.

  • Collective consultation must be completed before notice of dismissal is given to any of the employees concerned.

  • Failure can lead to Employment Tribunal award of up to 90 days' pay.

Information to be given to representatives:

the reason for the redundancy dismissals

the number of proposed redundancies and their job types

the total number of employees affected

the proposed methods of selection

the procedure to be followed in dealing with the redundancies

the method of calculating redundancy payment.

Employers are also required to consult individual employees and give them reasonable warning of impending redundancy.

Selection Pool:

· Always identify the selection pool carefully.

Will usually consist of those who undertake a similar type of work in a particular department, who work at a relevant location, or whose work has ceased or diminished or is expected to do so.

Owing to age discrimination legislation, ‘last in, first out’ (LIFO) now a risky selection method.

Case law has held that LIFO may still be relevant as part of a wider range of selection criteria but must not be used as a sole method of selection.

Selection procedures based on a points system which scores each employee against the relevant criteria can be used.