Will Oakes of Attwells Solicitors

IT IS true of most businesses that the people who they employ are at once their single biggest asset and single biggest liability. But it is a sad fact that, especially in economically challenged times when order books are not as full as they were last year, or the year before that, a responsible business owner must constantly review a firm’s workforce to ensure that it is operating to optimum capacity.

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Redundancy occurs most usually when the employer is overstaffed and no longer has the same requirement for the number of workers that the business employs. This overstaffing may be due to a reduction in the volume of work required to be done within the business because demand for its products or services has decreased but it is often linked to other issues such as technological change and geographical relocation.

Put simply, the key to a successful redundancy process is that it is conducted fairly. Fairness will ensure that the business will be able to successfully defend itself against any claims of unfair dismissal and, perhaps just as importantly, that those employees who remain with the business after completion of the process can feel that their employer has acted reasonably and justifiably to preserve their jobs and the future of the business.

It is not unusual for businesses to enjoy a boost, a surge in performance after a redundancy process but that, perhaps unexpected, side effect will only be enjoyed if employees are satisfied that the employer has acted fairly.

To ensure that the process cannot be criticised the employer will need to plan any redundancy carefully and devise a process that is fair. Usually this will mean taking the following steps:

• The employer must identify an appropriate pool for selection. So if, for example, a business needs fewer van drivers it must pool all van drivers together. Employees may want to argue for as a wide a pool as possible (to reduce the individual risk of being made redundant) and, given that most of the employees would probably drive a van the employer must choose carefully before deciding which employees should be at risk and which should not.

• Once a pool has been identified that employer must consult, properly and with an open mind, with members of the pool to establish whether or not there are any alternatives to redundancy.

• The employer must devise a method of selection. Most commonly employers use a scorecard method to determine the strongest employees by reference to a range of criteria (such as length of service, performance, attendance, etc). The criteria must be objective and any criteria which allows a manager to exercise too much of his or her opinion in relation to a specific issue like, for example, the employee’s “attitude” should be avoided.

It is perfectly possible in all situations to devise a fair process and employers should take the time do to so. As stated, the benefit of doing so might be a workforce operating with renewed confidence and optimism and the avoidance of an unfair dismissal claim the maximum cost of which could be over £70,000 in compensation to the employee.

This article is intended to be treated as a guide to the law only. For detailed legal advice on the subject please contact Will Oakes at Attwells Solicitors on 01473 746009.