When an employer faces having to let employees go, there are certain procedures that need to be followed. The journey to making employees redundant needs to walked with great caution.
Once ways to minimise or avoid compulsory redundancies have been exhausted, it might be wise to consider voluntary redundancy.
But, before getting to the stages of calculating redundancy pay, you'll need to firstly work out who goes and who stays. Selecting an employee for redundancy can be broken into three steps.
1. Identify the area of the business where cuts are needed and the number of redundancies necessary
When selecting employees for redundancy it's important to decide the area of the business in which cuts need to be made. For example, there may simply not be enough work to keep on three full-time sales staff when one would be sufficient. This will help with determining who to include in the pool from which the selection will be made. This judgement needs to be made for genuine business reasons.
2. Determine 'the pool'
This is the list of all the employees who fall within the category outlined above. In many cases, the pool of staff to choose may seem obvious. In the example above you may just include the three sales staff in a redundancy pool. However, the pool should not be confined to those currently occupying those roles but should include everyone capable of doing that work.
There is no need to determine a pool or undertake a formal redundancy selection process when the whole business is closing down. Also, where the post being made redundant is unique it may not be reasonable to form a redundancy pool but rather focus on an individual employee.
3. Set clear and objective criteria
When deciding on the selection criteria it needs to be objective and only based on factors that can be proved. The employer will draw up a list of the criteria which will help fairly choose who to make redundant from the pool of employees. These are run past the employees and explained.
It's important to choose criteria so the company will end up with the best workforce after redundancies are made. It can do more harm to the company to lose some of the best staff in order to make some financial cuts. Making sure the necessary skills and experience are retained is crucial.
Any assessment should be carried out by a line-manager with direct knowledge of the employees’ work, ensuring that the criteria are applied fairly and consistently. Extra care needs to be taken to not discriminate against anyone. An example of this would be penalising someone based on any absences or attendance issues in relation to disability, pregnancy or maternity.
Whilst this article acts a guide, the manner in which the redundancy process is conducted is extremely important. Therefore, to avoid problems it is advised that you seek help from legal experts.