Getting it right when choosing staff for redundancy
Published 24 November 2017
In challenging financial times the question of which staff to select for redundancy can be one of the toughest for any employer.
Downturn in profits, a desperate need to restructure or loss of a large contract usually comes with the inevitability of redundancies.
Whether it is the long-serving employee or young person in their first job or a member of staff returning from maternity leave, the decision about who to let go can be a very difficult one.
Recently defence manufacturer BAE Systems reportedly announced plans to cut nearly 2,000 jobs (1) . In August popular high street retailer Wilko started redundancy consultation with nearly 4,000 staff.(2)
Voluntary redundancy can provide employees with a financial incentive to leave an organisation of their own accord. The offer can include an enhanced severance package. For example the payment to the employee can be calculated using an uncapped week’s pay or by multiplying the amount allowed for each year of employment by two.
Although better than the statutory redundancy payment (5) this incentive may still not be enough to attract the necessary amount of employees.
In such situations a redundancy selection criteria (6) will have to be used to identify the members of staff no longer needed.
It should be objective, clearly defined, applied independently and designed to maintain the skilled individuals to best serve the organisation’s needs going forward.
Once the pool of employees at risk of redundancy has been identified it is essential that a fair procedure is conducted before deciding who to select using an objective and measurable system.
In using a redundancy selection matrix the employer can clearly set out the criteria that will be used in the decision making process. If it has been produced in consultation with trade union or other employee representatives this can help to assert the procedure and process were fair.
The employees affected should be consulted about the selection criteria and made aware of what will be evaluated. It can include
- The employee’s attendance record, which should be accurate and the reasons for any absences clearly established.
- Up to date and accurate disciplinary record.
- Individual skills or experience.
- Standard of work performance.
- Aptitude for work.
Those with the lowest scores are selected for redundancy. However, employers need to be careful to ensure the scores are fair. Pregnancy or disability-related absences should be discounted if the attendance record is being taken into account, but care has to be taken not to disadvantage other members of staff.
It is advisable to hold individual consultation meetings with the employees selected for redundancy. This provides an opportunity for the employee to propose suggestions and alternatives to redundancy and to raise any objections to their selection.
The redundancy appeals procedure (7) will allow any employee who believes they have been unfairly selected to challenge the decision.
Although there is no statutory requirement to grant a worker an appeal it is advisable as it will provide advance warning the individual is disgruntled, and may wish to pursue the matter at an employment tribunal.
Employers should consult with employees when proposing redundancies. Getting the selection process wrong can lead to claims for unfair dismissal. A proper redundancy consultation process will help an employer to avoid any such claims.
The right to be collectively consulted applies when there is a proposal to make 20 or more employees redundant over a 90-day period or less. There is no statutory fixed period of consultation when making fewer than 20 employees redundant, but review employment contracts and any policies and agreements as there may be a contractual obligation to do so.
1. BAE Systems to cut almost 2,000 jobs. BBC News [Internet]. 2017 Oct 10 [cited 2017 Nov 12]; Available from: https://www.bbc.co.uk/news/business-41566841
2. Wilko opens redundancy talks with staff. BBC News [Internet]. 2017 Aug 11 [cited 2017 Nov 12]; Available from: https://www.bbc.co.uk/news/uk-england-nottinghamshire-40904892
3. Voluntary redundancy: What are my rights? [Internet]. reed.co.uk. 2016 [cited 2017 Nov 13]. Available from: https://www.reed.co.uk/career-advice/voluntary-redundancy-what-are-my-rights/
4. Making staff redundant: Compulsory redundancy - GOV.UK [Internet]. [cited 2017 Nov 13]. Available from: https://www.gov.uk/staff-redundant/compulsory-redundancy
5. Redundancy payments and notice | Acas advice and guidance [Internet]. 2013 [cited 2017 Nov 13]. Available from: https://www.acas.org.uk/index.aspx?articleid=4254
6. What is the selection criteria for redundancy? [Internet]. Castle Associates Ltd. 2016 [cited 2017 Nov 13]. Available from: https://castleassociates.org.uk/support-centre/what-selection-criteria-redundancy
7. Handling small-scale redundancies | Step 6: Allow staff to appeal | Acas advice and guidance [Internet]. 2013 [cited 2017 Nov 13]. Available from: https://www.acas.org.uk/index.aspx?articleid=4555