More haste less speed will ease redundancy issues

Tuesday 11th November 2008

Whilst the current economic climate is creating opportunities for many companies – repair businesses, discount retailers and online spare parts suppliers are all benefiting from thrifty consumers – it is also raising the spectre of redundancy at others.

The well-publicised difficulties within the financial services and residential property sectors have led to large scale redundancies, some of which have been handled well whilst others have left the organisations in question with severely damaged reputations.

Put simply, if a business finds itself in the unfortunate position of having to consider making people redundant it has far greater ramifications than might initially be expected. A poorly handled redundancy procedure can damage business through its long term impact on morale, decreased productivity and a poor reputation in the marketplace.

The problem is that many businesses consider making redundancies a necessary knee jerk reaction that must be taken to achieve a primary objective of cutting costs. But, in fact, this decision needs to be one of the most carefully considered the business ever undertakes, because done improperly it can undermine the opportunity for future recovery.

Not only will hasty decisions possibly be wrong ones, decisions taken in haste will almost certainly lack the planning and foresight necessary to ensure that the decisions are fair and reasonable in the legal sense.

In this respect, did you know that to not involve those affected by a redundancy proposal in the decision itself is likely to render the entire process unfair? Often these decisions are made in secret and simply announced to the affected workforce. If you find yourself in the position where redundancy is a possibility you should consider involving your people.

They also know your business rather well, and they will probably have some alternative suggestions to consider before you decide upon redundancies. Try it. You never know, your people might just find you the solution which has been hiding in plain sight.

If your workforce needs to be trimmed down this needs to be done with consideration for those who may be the unlucky ones. This isn’t just about using a fair redundancy procedure – about which we lawyers can wax lyrical for hours if you let us – it is also about fairness in the broadest possible sense.

It’s about using the resources open to you and putting them in the hands of those you are having to let go. For instance, on a basic level, an employer will have numerous recruitment consultancy contacts. How about inviting them in to talk to those you have selected for redundancy? Very often recruiters will be all too happy to offer such a service if you have been a good customer to them in the past.

What about talking to other businesses in the vicinity directly? It is a good thing to do some of the legwork for your employees before the news breaks. In that way you can supply an up-to-date list of local vacancies plus a list of recruitment contacts to help them hit the ground running once the initial shock has sunk in.

On a different level – one which will incur a more direct cost to an employer – are the outplacement providers. Particularly relevant for those with very long service, outplacement consultants can provide invaluable guidance to dismissed employees. They can help deal with the situation, gain maximum advantage from any transferable skills, advise on interview techniques and improve presentation skills. Ultimately, they will be able to assist a swift transition to a new position.

For the dismissed employee, particularly at executive grade, it will be important to look carefully at the severance deal – if there is one – and negotiate the best outcome. Often the best placed lawyers to do this are the ones who regularly advise the companies themselves, as they may be more familiar with current thinking as to what should be included and of just what is possible and what is not. Additionally, the company lawyers may have a better network of contacts which the executive might be able to tap into for their next move. Stranger things have happened.

To conclude, although redundancy is an almost instinctive reaction for many companies to a downturn in trading and a need to cut costs, management must take time to consider the entire process and its impact upon the business.

By handling the redundancy process correctly, providing assistance to employees who will leave the business and communicating clearly throughout, your organisation will retain its integrity and protect its reputation in the long term.

For further information please contact Philip Paget, head of employment law at Gordons LLP on 0113 227 0100 or email