Who and how to inform employees of a plan to make redundancies

In last week’s article we covered reviewing the business to see if redundancies are needed post Covid lockdown and if yes, how to plan it.

Following on from that article, this week we look at the announcement(s) that may be needed to kickstart the process with employees.

Surprisingly there are no legal guidelines regarding making an announcement, only what should be confirmed in writing prior to commencing the consultation process with all employees ‘affected’ by the proposal.

However, all employers we have supported through such a process have wanted to start with some form of announcement to those affected as setting expectations and explaining the process that will be followed is clearly the fair and professional thing to do and we find employers wish to do all they can to support their employees through this difficult time and treat them fairly.

Also, employers ignore ‘survivor syndrome’ at their peril. This is where remaining employees judge the employer regarding the redundancy process and how their (now ex) colleagues were treated, making judgements regarding how they are likely to be treated if their roles become at risk at some point in future and whether the organisation is a good employer.

Before we talk about the announcement itself I’d like to clarify why I have been careful to use the phrase of people being ‘affected’ by the redundancy plan. This is because the guidelines are clear that it is not only those who may lose their jobs who must be consulted with about the plan, but also those employees whose roles are impacted by the proposal in terms of other changes e.g. different processes they may need to follow, changes in the management structure or to the volume or type of work they are required to carry out afterwards.

The organisation should therefore consider who is likely to be ‘affected’ by the redundancy proposal early in the process and plan accordingly.

As explained above, the process generally starts with some form of announcement to employees and we recommend that it should normally be made by the line director of the affected function or department with HR (or whoever will conduct the consultation meetings) in attendance.

Remember though when deciding who should be involved in managing the process that the final step in the redundancy process is to allow individuals to appeal against the outcome. Whereas it would be fine for the line director to make the announcement and still hear appeals, they should not be involved in the process at all in between. The individual who hears any appeals must not have been involved in the redundancy decision making process, to maintain their impartiality.

Also, wherever possible appeals should be made to somebody more senior than the redundancy decision maker. In smaller companies this may not be possible and that would normally be accepted by an employment judge. Please take further advice if in doubt.

The announcement, or several announcements, should then be made to all those ‘affected’ by the redundancy proposal. This may be quite a large group and the announcement may be different to different groups depending on how they are affected by the proposal but we would advise that you make all announcements as close together as possible timewise to ensure other employees don’t find out how they are affected by the proposal via the rumour mill.

Although there is no requirement to make an announcement to those employees who are not affected by the proposal, it is best practice to give them brief details of what is happening as it is likely that some such employees will know those affected or deal with them day to day. Any announcements to this group can be sent electronically and you should be mindful that ACAS require that such an announcement should not be made until a degree of meaningful consultation has taken place with all those who are at risk. You should also protect the confidentiality of those affected so this announcement would normally be less specific than the announcement to those directly affected by the proposal.

It is good practice to put together a script of the announcement beforehand, especially where announcements will be made simultaneously by different people at different sites to ensure consistency. It also acts as a record of what was announced if there are any appeals against the process, or tribunal claims. We recommend that the announcement should be quite detailed and include the following as a minimum:

• An introductory explanation of the business conditions or other reasons for the proposed redundancies / changes / reorganisation.
• The roles that are affected and why they have been chosen (be mindful regarding ‘pooling’ as explained in last week’s article, you may need to explain this in more detail).
• Include people / roles who have been ‘slotted’ in to a role.
• Be clear about the roles that you are proposing to make redundant and roles that will not be made redundant but will change if the redundancy proposal goes ahead.
• Confirm which specific roles are now at risk of redundancy and an explanation of the reasons.
• Explain that this does not mean for certain that roles or people will be made redundant, you will follow a full and fair consultation process where you look for alternatives to making redundancies.
• Locations where the proposed roles will be made redundant, including the numbers at each site.
• The proposed new organisation or departmental structure.
• The method by which redundancy pay will be calculated i.e. the Statutory scheme, an enhanced scheme, or the scheme as per company policy or union agreement.
• An explanation of the consultation process, including when it will start and is expected to end along with whether there will be Individual or Collective Consultation.
• Where there are more employees at risk than roles available for them to be appointed into, an explanation of the selection process that will be used to decide who is appointed into the available roles.
• What roles are available for individuals to apply for, if not covered above along with an explanation that the salary for any role they apply for will be based on the terms and conditions of that specific role, not their current or previous terms.
• Although it is not a requirement you may decide to restrict applications for new roles in the affected departments initially to those employees whose roles have been placed at risk of redundancy and only allow other employees / external candidates to apply once applications from ‘at risk’ employees have been considered.
• Explain that each individual whose role is at risk of redundancy will receive a letter confirming this, with details about the consultation process. Normally these letters are handed out at the end of the announcement meeting.
• You may decide to offer a Voluntary Redundancy scheme before making compulsory redundancies. If so, please be mindful that some people you do not wish to leave may apply. You should be clear therefore that you will consider all applications for VR but they may be denied based on business needs. In order to encourage applications it would be fine to make voluntary terms more generous than compulsory redundancy terms.
• Any measures the company is taking to reduce the need for compulsory redundancies e.g. recruitment freeze, overtime ban etc
• Ask for any questions at this stage but try and keep this brief and explain that they can raise any queries in the consultation process.

Having employee Representatives present at the announcement is not required unless a union is recognised by the company, in which case the union will wish to be present at all meetings and will agree a plan with you including which Representatives will attend which meetings.

If an employee who is affected by the proposal is vulnerable or disabled you may wish to consider allowing them to have a colleague, family member or carer present at all meetings, including the announcement.

Remember to ensure that all individuals affected by this announcement, including those on maternity leave, parental leave, sickness absence, holidays etc receive the announcement at the same time or as soon as is reasonably practical afterwards to avoid people finding out in the wrong way.

The details should then be confirmed in writing and handed to each affected employee at the end of the announcement.

For more details about the redundancy announcement or process in general please see our free guide 8 Steps to Making Redundancies.

Alternatively, 186hr has produced a comprehensive guide to making redundancies that includes detailed explanations of how to carry out each stage of the process, model policy documents, letters and other documents that have been provided by ACAS and CIPD along with 2 hours of consultation with a highly CIPD qualified senior HR professional to help you tailor the process to your organisational needs.

Some of the above issues and actions need further explanation, as follows:

The Recruitment Selection Process

If there are more people at risk of redundancy than roles available in the proposed new structure (often increased as a result of ‘pooling’) then, unless you offer voluntary redundancy and receive enough applications, you will need a fair way to select who will be appointed into the roles and who will be made redundant.

We recommend that you ask people to apply for any roles they wish to be considered for in the new structure, and then follow a robust selection process.

Whereas it is fine to choose any fair selection method you prefer e.g. an interview process, you should combine that evidence with other more reliable data you hold about the individuals such as sales results, appraisal documentation, live disciplinary records etc.

We often advise companies that although interviews or other assessments may seem like a good and fair idea, the most reliable evidence you could possibly use in such a process is that which you have observed while working with the individuals over the preceding months or years

We therefore recommend that you consider using a ‘Selection Matrix’ to make decisions. Tribunals tend to look favourably on organisations that use this approach, where you decide on the important traits, skills, knowledge or competencies for the role and then rate each individual on each of these areas based on your experience of working with them.

When using a selection matrix approach you would normally use data that is on record such as performance appraisals, KPI data and live disciplinary records, although line manager assessment against the criteria is also acceptable as long as they have robust evidence as justification of the scores given, to counter any accusations of bias.

Generally you should avoid length of service as one of the selection criteria as older workers tend to have longer service than their younger colleagues so this could be viewed as indirect age discrimination.  Also, whilst it is acceptable to include absence as one of the criteria, please be careful to discount any absence that is related to a disability, maternity, union activities or other statutory reasons employees are entitled to have time off.

A matrix approach avoids the time needed, stress and other weaknesses of interviews as a selection tool.  However, if you do decide to interview or follow some other selection process there is no requirement for you to interview any individuals who, based on their application or your experience of working with them, clearly do not have the knowledge, skill or experience required for the role they have applied for as long as you can justify that decision.

In the past, some companies would follow a ‘Last In First Out’ (LIFO) selection process. We would advise against this as it can be found to be discriminatory if a particular group is disadvantaged by such an approach e.g. often younger workers have less service and so may feel LIFO is age discrimination. Tribunal claims against LIFO as a redundancy selection method have been successful in the past for this reason.

If it seems unlikely that ‘at risk’ individuals have the required skills etc for the vacant roles in the new structure it is normally fine for you to look elsewhere in tandem with considering applications from those at risk of redundancy, although you may wish to be discreet about this!

Finally, where two individuals are broadly similar in terms of their suitability for a role but only one of them is at risk of redundancy, it is clearly best practice to appoint the ‘at risk’ individual i.e. adhere to the legal requirement to avoid or reduce the need for redundancies where possible. However, where the other candidate is a better fit for the role there is no issue with appointing them even though they are not at risk of redundancy.

Individual or Collective Consultation? 

As explained in more detail last week, where the company are proposing 20 or more redundancies at one establishment within a 90 day period then Collective consultation, where elected Representatives consult with the organisation on behalf of affected employees, must take place rather than Individual consultation.

Where under 20 redundancies are proposed the company can choose the consultation method but, as part of the process you should check that those who are at risk of redundancy are comfortable with such a decision, and the process to be followed.

Choosing between Individual and Collective consultation would normally be decided by practicality i.e. numbers and logistics. The process is easier to manage and more personal if consultation is Individual, but it may be impractical to hold several individual meetings with 19 employees.

Finally, where there is a company policy or Union agreement regarding redundancies then clearly this should be followed regarding conducting Individual or Collective consultation.

Appointing Representatives for Collective Consultation

Where an organisation recognises a trade union the union will usually appoint Representatives for the redundancy process, who will then consult with the organisation on behalf of the employees.

Alternatively, if there is no union but Representatives have been previously elected for a different reason or purpose then these Representatives may be appointed by the organisation for the redundancy Collective consultation process without the need for a secret ballot.

Where neither of the above apply, Representatives need to be elected to look after specific groups of people in the consultation process. It is a legal requirement that these Representatives are elected via a secret ballot, although if you ask for volunteers and a suitable number put their names forward then you can appoint these individuals as Representatives without the need for a ballot. There is often a sigh of relief when this happens as a ballot can be tricky and cause delays to the process.

We find the process works well if there are groups of 6-10 employees per Representative, but there are no legal guidelines if a different number would work better for your organisation.

Importantly, it is the employees’ decision who to choose as Representatives, not the employer i.e. the employer should ask for volunteers, not choose them. The employer should also avoid stopping an ‘awkward’ member of staff becoming a Representative -however tempting it may be – as, whether you like it or not, apart from managing the ballot process the employer should have no input into which employees are appointed as Representatives.

If there are insufficient volunteers to be Representatives then you will need to consult individually with all those at risk of redundancy. Clearly this would be difficult for large numbers but it has never happened in redundancy programmes where we have been involved.

The process of electing Representatives is a legal requirement and will need to be organised by the employer in a fair way. 186hr would be happy to provide guidance and CIPD approved documentation if needed. Please contact us

Once appointed you should confirm the election and role of each employee Representative for the purposes of collective redundancy consultation in writing. CIPD approved letters can be found in the above 186hr guide.

‘Proposed’ Plan

You will note that whenever we talk about the redundancy plan in this and all other articles covering redundancy we refer to ‘proposed’ changes, ‘proposed’ new structure, ‘proposed reorganisation’ etc. You should always refer to the plan as the ‘proposed’ plan until a final decision has been made after the consultation period has ended, to avoid any potential later accusations that the consultation process was not genuine and the result a foregone conclusion.

We hope this article has been useful. If you would like to discuss the redundancy process, or any other HR matters further please do not hesitate to contact us