REDUNDANCY See Pilbeam & Corbridge (2006, 2008, 2010): One of potentially fair reasons for dismissal Occurs where dismissal wholly/mainly due to fact: –Employer has ceased or intends to cease to carry on the business for the purpose for which the employee was employed; or –Employer has ceased or intends to cease to carry on the business in the place where the employee was employed to work; or –Work of a particular kind, or the need for employees to carry out work of a particular kind… have ceased or diminished or are expected to cease or diminish (ERA 1996)

REDUNDANCY 4 Main Causes: –Structural decline –Declining economic activity –Changing technology –Reorganisation / restructuring Legal Framework Covers 4 Aspects: –Compensation paid for job loss –Fair selection for redundancy –Consultation with employees –Other statutory rights

1. REDUNDANCY PAYMENTS Statutory Entitlement: –Dependent on age / continuous service –Employee can make claim to ET for non- payment of statutory pay –Employees have right to written statement of payment calculation –Dispute can be referred to ET –Employer can exceed statutory pay Statutory Pay Exceptions ( –E.g. If employers offers to keep you on/if you refuse alternative post without good reason

REDUNDANCY PAYMENTS Statutory Entitlement: Age Redundancy Pay Rate Up to 22 ½ weeks pay for each year of service 22 to 40 1 weeks pay for each year of service 41 and over1½ weeks pay for each year of service N.B. Continuous service min. of 2 years/max. of 20 years Weeks pay = £464 (year ) Source:

2. REDUNDANCY SELECTION Some selections for redundancy automatically deemed unfair (Pilbeam and Corbridge, 2010): –TU activity or membership –Age –Part-time working (unless can be clearly shown the work cannot be done part-time) –Employee action on reasonable Health & Safety issues –Asserting a statutory employment right E.g. NMW, public interest disclosure –Maternity-related issues –Sex, marital status, disability, race, religion or belief, sexual orientation of an employee –Jury service (

NON-COMPULSORY REDUNDANCY Voluntary – Pros & Cons? –Employer seeks volunteers –Employee decision so –Reduces potential for conflict –Reduces negative impact but –Costly –Lack of control over volunteers –Selection from volunteers –Refusing volunteers consequences Early Retirement – Pros & Cons? –Can also constitute redundancy –Can reduce / create conflict –Can skew age profile of staff

COMPULSORY REDUNDANCY Last in First Out (LIFO) –Transparent / easy to apply but –Can skew skills mix –Equal ops implications for females Employee Efficiency & Effectiveness Criteria –Performance, absence, time-keeping –Needs accurate records but –Dismissal must be for redundancy & –Appraisal should not be only basis Application of Skills / Acquisition of Qualifications –Retention of key / skilled employees –Identification of required skills but –Difficult to define these skills in detail & –Data on individuals’ skills required

3. CONSULTATION Collective Redundancies ( –Where 20+ proposed redundancies, employer duty to consult with: ‘appropriate representatives’ –If recognised TU, employer obliged to consult TU –If no recognised TU, employee reps. must be elected Timing of Collective Consultation ( –Dependent on number of proposed redundancies within 3-month period: 100+ proposed, 45 days minimum advance written notice to relevant recognised TUs or other elected reps/RPS/SSBIS 20-99, 30 days minimum advance written notice to relevant recognised TUs /RPS/SSBIS

3. CONSULTATION Information for Representatives –Reasons for planned redundancy –Numbers & type of employees to be made redundant –Total number of employees of this type employed –Proposed selection criteria –Proposed procedure & timing –Redundancy payments Small-scale Redundancy –Where less than 20 proposed redundancies, employer advised to consult with employees/reps Explain / consider individuals’ situations Selection criteria / decision Alternatives to redundancy Suitable alternative work in organisation

4. OTHER STATUTORY RIGHTS Reasonable paid time off to seek future employment Statutory notice period / payment in lieu of notice Trial period in job deemed as ‘suitable alternative work’ & right to redundancy pay retained Suitable alternative work should: be acceptable to both parties / have acceptable remuneration & status

AVOIDING REDUNDANCY Human Resource Planning Seek business solutions –e.g. new markets / new products (but long-term solution?) Review use of temporary workers/contractors/FTCs Freeze recruitment –e.g. if short-term need to cut costs (but no control over who resigns) Reduce / eliminate overtime –e.g. redeploy surplus staff (but not practical for specialist skills) Retrain / redeploy employees –(but depends on employee trainability, identification of new skills, retraining & reskilling time) Short-time working / lay-offs –e.g. if short-term issue (but contractual constraints) Natural wastage

EFFECTIVE MANAGEMENT OF REDUNDANCY The Redundancy Policy –Opening statement –Consultation arrangements –Actions to be taken to reduce redundancy need –Selection criteria –Redundancy pay arrangements –Redeployment procedures –Appeals procedure –Support systems The Actual Handling of Redundancy……

HANDLING REDUNDANCY Training and enabling of managers: –Preparation / appropriate skills / competence –Awareness of common concerns –Awareness of individual concerns, circumstances & characteristics –Dealing with people as individuals Communications strategy: –Timing of initial disclosure –Who makes announcement –Reasons for redundancy –Alternative solutions –Redundancy package –Opportunity for discussion

HANDLING REDUNDANCY Counselling & support: –Financial planning & advice –Career counselling –Skills assessment / development –Job search skills –‘Job shop’ Effective counselling and support requires: –Access to trained staff –Communication of support system –Sufficient resources

FOLLOWING REDUNDANCY Rebalancing the Organisation Dealing with those remaining in organisation: –Reassurance –Development of rebalancing plan –Communication of the plan Rebalancing Plan Shape, design & structure of organisation post- redundancy Strategic & HR Planning should anticipate numbers of jobs / skills / structure

CONSIDERATIONS FOLLOWING REDUNDANCY Survivors left in organisation - emotions/fears: –Overcome ‘survivor syndrome’ –Reassure / contribute to employee confidence –Engender commitment / success Message conveyed to survivors: –Sense of direction / planning –Consideration of employees How? –Communication strategies –HR plan to reflect business plan –Job redesign / work restructuring –Skills / training needs analysis –Training / development of surviving employees