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PUBLISHED: 11:46 03 December 2012 | UPDATED: 22:27 20 February 2013



For most people, it's the season to be jolly. For some employers, it's the time when cashflow and business forecasts dictate that making redundancies may become a business reality.


For most people, its the season to be jolly. For some employers, its the time when cashflow and business forecasts dictate that making redundancies may become a business reality. No one wants to, so maybe thats why so many get it wrong, but there is no need to make the most common mistakes.

As an employment law practitioner, I am often surprised at the number of companies who get financially penalised for getting redundancy wrong. I probably read about two or three a week in this region, and the awards to employees are usually between about 5,000 and 20,000. Therefore its not a mistake you can be casual about.

Its really not that complicated. As far as making the initial decision to reduce staff, a tribunal will not interfere with an employers business plan. Regardless of how foolish a decision may look, regardless of how obvious to others that a business will not cope with a fewer number of employees, a tribunal is not allowed to judge the employers business reasoning.

Once you get past this basic concept the whole thing starts to look a little clearer. The next basic principle is that an employer must not make the FINAL decision until the staff have been given a chance to understand what is happening and comment upon the plans. Employers dont have to agree with employees comments, they simply have to listen to them and think about them. Once an employer has done this, then the employer is free to carry on as originally planned. Often the key to this in practice is use of the word proposal. So many employers ask the question, If I cannot have made the final decision, how can I ask staff about the decision? The answer is simple. The employer must ask about the proposal to make redundancies. It doesnt become a final decision until opinions, (if any) have been gathered and considered.

The other main stumbling block is who should go. An employer is not permitted to simply choose the person they dont like. Often it will be simple. If there is only one person doing the job that is going to go, then in most cases the choice is made for you. So you have to identify the job that is going. For example, Sales Rep. If you are in this position then you should be able to outline what is happening to that role. It may be being outsourced, it may be being split up between the sales director and the managing director for example, or you may decide that you simply dont need the role anymore. Ask the potentially redundant employee if they can do the new bigger job of Sales Director, and if they clearly could not do the role, then you can move on.

If there are more than one in the role, but you do not need to lose all of them, then you will need to select. Again selection is straightforward. You draw up a list of the skills required for the job, and score each employee according to the role requirements. The worst score will be redundant. Procedurally, you show the skills list to the employees (all of them) before marking and ask for their comments. Again this is a proposed list until you have heard their comments. Once marked, show the selected person their score and ask for their comments before finalising the matter.

Once you know who is going, then you invite them to a meeting to terminate their employment. Just as you would for a disciplinary meeting, you give the employee notice, tell them they can be accompanied by a colleague, and give them the right to appeal.

Of course there are nuances and considerations along the way, but there is no need to make the simple and avoidable errors that cost employers so much money on a regular basis. Clearly if redundancies are on the cards, paying for a little expert advice up front may well save you pots of cash, just at a time when you could do without financial penalties. Not to mention the time and energy that goes into defending a tribunal that is usually totally unnecessary.

Its not a nice thing to do, at any time of year. If you have to do it, you have already recognised that for the benefit of a whole business sometimes, one or two must go. So get the process right, and have a very happy Christmas.

Darren Sherborne is a Partner at niche employment law practice Sherbornes LLP of Cheltenham.


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