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.