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Staff redundancies - how to avoid some of the common pitfalls

By Claire Mansell - 25 May 2020

With economists predicting a significant economic recession, it may be tempting for business owners to start reducing staff numbers. This will be particularly so for those businesses who have been relying on the wage subsidy to pay their employees' wages. However, it is unlikely that simply relying on a potential looming recession will justify making employees redundant in the eyes of the law.

Most employers and employees will be aware that an employer must follow a fair consultation process when proposing to make an employee redundant. This is just one part of an employer's obligations. A key aspect of fair and legal redundancies process is ensuring that employees are provided with sufficient and accurate information during the consultation process. This can be one of the hardest parts of the redundancies process to get right. The Courts are quick to dismiss a redundancy that is done on the basis of the employer's "gut feel" or where there has been little or no formal review or analysis of their ongoing staffing needs.

Before an employer even starts the redundancy process, they will need to sit down and work out exactly what they would like to achieve by making the employee's role redundant. If the redundancy is due to cost savings, the employer will need to show financial records which justifies this. The employer will also need to think about what will happen to the duties which the affected employee is currently undertaking. In most cases, their day to day work won't simply disappear but will need to be reallocated elsewhere in the business. Alternatives to redundancy must also be considered. For instance, if there is a downturn in work, would the employee be willing to work part-time? This review should be documented. The longer the "paper trail", the more likely the redundancies are to be justified.

All this information will ultimately need to be provided to the affected employee during the consultation process. As well as ensuring that employers are meeting their legal obligations, providing this information allows employees to know where the employer is coming from. In most cases, it will make the consultation process smoother and the employee less likely to draw their own conclusions about the "real" reasons behind the redundancy.

For businesses which have been relying on the wage subsidy scheme to pay their employees' wages, they should be thinking about putting together this information now. Rushing this process at the end of the wage subsidy scheme is less likely to be legally compliant and could result in personal grievances being raised. While it may seem like a lot of work, particularly for a small to medium business which is already struggling, in the long run it should discourage disgruntled employees from raising a personal grievance (which are themselves time consuming and costly). As the old military saying goes "time spent in reconnaissance is seldom wasted."

If you are considering making your staff redundant, please contact Claire Mansell or Andrew Steele.

 

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