Redundancy

A redundancy process begins when roles are no longer required. There are a number of legal requirements that must be met when making an employee redundant and an organisation must check that their process is compliant.

It is important to consider alternatives to redundancy such a moving a worker to another role, limiting overtime or offering voluntary redundancy. Making staff redundant can remove important knowledge, skill and capabilities from an organisation and also have a significant impact on staff morale.

A redundancy process will include multiple steps. An organisation may have their own policy which they must follow when making redundancies and the process must include consultation with staff. A redundancy plan will include details of the alternatives sought as well as details of how staff will be selected and be informed about the process. Employees should also be aware of appeals process that they can follow if they are selected for redundancy.

It is important that employees are informed of the process that will be followed, the reasons why redundancies need to be made and how the impact of this can be mitigated. The impact of redundancies can be mitigated by identifying the skills and experience which will be essential for the organisation’s future. Good two-way communication is also important and employees should be encouraged to make any concerns they have known. The organisation can also offer help and support to prepare employees to apply for future roles outside the organisation.

Selecting which staff must be done in a fair way. The cause of the redundancies may make this straight forward, in the case where an entire department is closed down or require a selection criterion to identify potential candidates. Candidates for redundancies should be scored against a set of pre-defined criteria. The output of other human resource processes such as competency management or absence management may be used as part of the scoring process.

Employees which are made redundant are entitled to redundancy pay, subject to a statutory minimum amount. Employment contracts may also specify details of redundancy pay. Redundancy pay is calculated based on the number of years of service that an employee has.

Once the consultation period is complete the employees should be given a notice of redundancy. This must include details about the selection process and their scoring, the pay they will receive, their leaving date and how they can appeal.