HR & Management

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The Good Redundancy Guide

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1. Do you need to comply with collective redundancy consultation requirements? These will generally kick in if 20 or more redundancies are proposed from one establishment within a period of 90 days. Just because a headcount reduction of 20 or more is planned, though, it won’t always trigger collective redundancies. Get strategic advice if you’re anywhere near this mark.

2. Make sure you have the selection and consultation process timetable mapped out, with the relevant letters and Q&As ready for each step.

3. Are you offering appeals? If it’s a collective redundancy exercise, you might not need to. If it’s an individual redundancy exercise, you’ll need to look at whether or not your appeal route complies with statutory dismissal procedures.

4. Many employers want to know if employees’ notice periods can run concurrently with the collective consultation period. The answer, in a word, is no.

5. Penalties are severe if you don’t follow the collective consultation process to the letter, so ensure you cross every t and dot every i. And remember that procedures used a few years ago will need to be checked to ensure compliance in light of recent case law.

6. Some restructures will be caught under TUPE (Transfer of Undertakings and Protection of Employment) legislation. It’s important to check this because you may be required to re-employ certain employees under the new structure. If you’re planning a restructure and TUPE does apply, consider if the consultation processes overlap. You don’t want to fall down on either – but similarly you don’t want to be duplicating work and effort.

7. Think about benchmarking your redundancy package with the market. Packages shouldn’t necessarily be as generous now as they may have been a few years ago.

8. Structure any severance payments to maximise the tax position and any commercial return, as well as protection from claims. Seek tax clearance for any enhanced redundancy scheme.

9. Work out the impact – and your position – on deferred commission/bonus/stock options.

10. How will you incentivise key employees to stay, at least until completion of projects (or, in the worst-case scenario, closure of the business)? Any retention bonuses should be structured in a tax-efficient way.

11. Put in place sufficient contingency planning in case of a staff walk-out.

12. Put in place an internal and external communications strategy, which should be reactive to media but proactive with key customers and clients. Do you need to be talking to local or national government?

13. Make sure your IT systems are secure before making any announcement of job losses. You don’t want your trade secrets walking out of the door on someone’s iPod.

14. If the business is going to close, you’ll need to manage your data protection responsibilities carefully. Agree who will retain the records and deal with reference requests.Graham Paul is a partner in the employment team of UK law firm Dundas & Wilson.

Related articles:How to sack your staff

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