How do you select employees for redundancy?
One of the most difficult choices you may ever have to make
If you are simply closing down a section of your business, so that all the employees within that section will be made redundant, then you will not need to go through a selection process. You should still consult with the employees involved. Otherwise you will need to decide how you will select the employees that are to be made redundant.
It is important not to rush any aspect of the redundancy process, including deciding who should go, says Philip Millington, of commercial law firm Osborne Clarke.
“It is not unusual for employers faced with a downsizing exercise to say to themselves, “I don’t like so and so” and send them a letter saying they’ve been made redundant, without any objective selection or consultation.
“An Employment Tribunal will expect an employer to look at a situation and say to themselves, “I need to cut the workforce of ten down to eight.” It may be from anywhere in the company, or from a particular area. The employer should then apply objective judgement to decide who should go, and consult with those who are affected.”
Millington adds that mistakes can also be made if employers get nervous. “They can find it embarrassing to have to make someone redundant, especially in a small business where everyone knows each other. They want to make it as painless as possible so they quickly select someone to make redundant, without going through the correct procedure.”
So what is the correct procedure? Lydia Harrison of law firm, Berg & Co, explains.
“The selection criteria have to be objective, based on factors that can be measured and proved. The criteria should also be designed so that you end up with the best workforce at the end of the day, since if you’re making redundancies to cope with an economic downturn, you’ll need to retain the staff that will give you the best chance of keeping the company going.”
It’s all about planning, says Millington. “[Employers] need to plan it carefully. They can be particularly at risk if they use redundancy to remove specific employees. If they feel that someone in particular has to go, then it is important that they do it in a way that doesn’t suggest there was an obvious target, and that they go through the right procedure”
Steps to selection
- Identify the job category and the number of redundancies necessary ie. three serving staff, two sales executives
- Identify all the employees who fall within that category – this is called the pool
- Select clear and objective criteria in order to determine which employees are to be made redundant from the pool. Criteria can include:
- length of service (last in, first out)
- ability, skills or qualifications
- conduct or attendance (taking into account any reasons for poor records)
- performance records
Automatically unfair reasons for dismissal include:
- because of race, sex or disability
- because a woman is pregnant
- because an employee is or is not a member of a trade union
Businesses are tending to move away from simply selecting the newest employees for redundancy, explains Harrison. “Historically, “Last in, first out” has been used but these days it is generally only one of a raft of criteria to ensure the staff remaining have the right skills.”