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10 minute read

How to create a legal, fair and compassionate redundancy process

Woman sitting at her computer receiving bad news

We talked to Nick Lawson-Williams, People Director at People Puzzles to find out what businesses need to do deliver the best employee experience possible in the current circumstances.

 

Key Takeaways

  • Businesses need to avoid rushing into making redundancies until you’ve considered all the alternatives.
  • Following a step-by-step process protects your business from litigation and allows employees time to absorb the emotional aspects of redundancy.
  • Be authentic when you talk to staff about redundancies. It can be appropriate to share your own emotions and show that this wasn’t an easy decision to make.
  • Provide support by being open and transparent about the redundancy process, and by making yourselves available to employees for questions.
  • To help your remaining employees bounce back, ask the difficult questions, listen closely, and take their feedback on board.

 

Firstly, let’s get clear—what does “redundancy” actually mean?

“I would say that essentially redundancy is the need to reduce the size of the workforce. For many businesses, the opportunities coming their way are starting to dry up, or have been drying up, to the point where they can no longer afford to retain the number of staff that they have. So through a process of restructuring they are looking to exit a number of staff from the business. 

That’s the nuts and bolts definition. But there’s also the emotional perspective, which to me is a very important part of this. Clearly, it’s a very difficult process for those people who are affected by it - not only for those people who are being made redundant, but also for those that are instigating the redundancy process. The company is having to make these reductions in staff when it’s the last thing they want to do.”

 

Before a business makes redundancies, what steps should they take?

“To give you an example of what businesses should do before making redundancies, I’ll refer to the client that I’m working with at the moment (I won’t mention them by name).

Early on in the pandemic, they realised they were going to have problems. So, they did a very sensible thing - they went back to their business plan and they said to themselves, “OK, look, let’s just tear this up, it’s not going to happen. Worst case, we can probably survive with no orders coming in for a period of time, and if we do that for a bit, we’re back at 40% capacity. So, if we’re at 40% capacity, what are our targets going to look like? How many people do we need in the company to help us achieve that plan?”

 

Are there other options a businesses can consider, rather than making redundancies? 

“For some businesses with a real need to reduce operating costs immediately, there may not be many other options open to them. But for other businesses, there are opportunities to look at alternatives. For example, they could consider putting people on part-time hours in conjunction with job sharing, on a temporary basis. The employees still have a job, they’re earning some money - it’s not great but it’s better than nothing. 

It’s critical, even in these very challenging times, to avoid panicking and rushing into making redundancies without giving the alternatives due consideration.”

 

What are the key things to consider when you’re letting people go, to make sure your redundancy process is legal and fair?

“If a business has a need to make 20+ redundancies from a single site, then they have to follow a more formalised approach to redundancy. If the company is unionised, clearly the unions need to be consulted. If they aren’t unionised, where there are 20 or more potential redundancies, there’s the need to elect employee representatives. The management then needs to work with the employee representatives to communicate with those people that are affected by the possibility of redundancy.

 

There are also guidelines on how long the consultation period should last as well. The UK Government website is a good place to start. It gives you a good idea in a very few words about what you can and can’t do. 

When there are fewer than 20 being let go at a single site, there are no hard and fast rules. Even so, it’s still important to follow a process. The period of consultation can be shorter, but I tend to work to around 14 days. That gives people enough time to prepare for any consultation meetings and also reflect on what’s been said at those meetings, and so the process doesn’t feel unduly rushed.”

 

In your experience, what are the common pitfalls to avoid when you have to make redundancies?

“I think there are lots of potential pitfalls, but if you stick to the process and you do things by the book then you should be ok. With the more formal process for the 20+ redundancies, it’s really important that companies follow the rules and regulations, particularly around the timings of the consultation process. If you make any mistakes there, there’s the potential that those employees being made redundant could make a claim against you as their ex-employer because you haven’t followed the process. There are no excuses - it’s clearly laid out.

With regards to the consultation process, a lot of companies complain that it’s too lengthy. Once they’ve decided they need to make people redundant, they just want to get them out. But my experience with working through the process is that it’s tip top, to be honest. Yes, it takes time - around a 2-week consultation period for fewer than 20 people, and considerably more for more than 20 people. But the process allows you to do things methodically, step by step. You can be quite clear on what's going to happen. The redundancy consultation process allows for collaboration, good dialogue, adult to adult conversations, the sharing of ideas, or exploring other ways of avoiding redundancies.”

 

How should businesses break the news to their employees if they're being made redundant?

“I’ve never come across someone who’s elated at the prospect of being made redundant, but I think there are ways that you can soften the blow. With my client that I was talking about earlier, we put together a communication that essentially says,

“Look, this is the situation the business finds itself in, we’ve had to revise our plan, we have to save a lot of money on our operating costs and unfortunately that’s going to have an impact on people.”

 

After we sent out that communication in writing, I encouraged the Managing Director to verbalise it in various meetings on each of the sites and in remote meetings with furloughed employees. We felt it was appropriate just to bring people into the picture of what was going on, even though it was unsettling for them.

The next day we made ourselves available over the phone in case anyone had any questions they wanted to ask us privately. Then, with the people in teams, where we needed to reduce the teams down numbers-wise, we applied reasonable selection criteria, and we used our assessment of each individual against those criteria to determine those provisionally selected for redundancy. Next, we met with each individual face-to-face or via video conference with furloughed employees to get going with the redundancy consultation process.”

 

Communicating redundancies can also be upsetting for employers. Do you think it’s appropriate to show emotion when you’re talking to employees about redundancies?

“It’s all about being authentic. You want to avoid “crocodile tears”—if that’s not your normal way of being then I think people might find it insincere.

In the case of the client I’ve been working with recently, the Managing Director got quite visibly upset on several occasions when she was communicating with the team about the redundancies. She was embarrassed at first, but I said to her, “You shouldn’t be embarrassed. It’s good that people can see that this is how it’s making you feel - that you’re not doing this lightly.” I think it’s good that she wears her heart on her sleeve.”

 

After redundancies have been completed, company morale might have taken a knock and your remaining workforce might be feeling anxious and stressed. What advice do you have to help businesses bounce back?

“If you want to help your employees bounce back, you have to time it right. If you’re going through a restructuring program, in my view you have to complete that program before you try to re-engage the “survivors”.

I’m a strong advocate of listening to what your employees are telling you. It may be that it’s good to have a very open and honest employee engagement activity with the employees that are left. You could do it by survey, or you could get people together and have an open and honest conversation.

But be careful with this - I’ve seen companies that are attempting to do this at the end of a restructuring process, but they’re not asking the right questions. They’re asking questions like, “What do you think our strategy should be going forward? How important is customer satisfaction?” All great questions, but what we should be asking at this point is:

  • How do you feel about things?
  • Do you think we’ve dealt with this situation in the right way?
  • What could we have done better?
  • Where do you think we fell down? How do you feel about the company now?”

It’s also important that the leadership team does something with the feedback. It’s all very well getting everybody together and having a heart to heart, but if nothing comes out of it, your team will rapidly become even more disengaged and cynical. So, you’ve got to say to yourselves:

“OK, they’re probably going to tell me things I don’t want to hear, but I’ve given them permission to do that. I’ve got to take what they’ve said on board and do something positive with it.”

 

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What about so-called “survivor guilt”? How can businesses reassure the remaining employees that they are valued?

“I think survivor guilt often gets overlooked. If employees are struggling with guilt and anxiety, you need to convey a clear message:

“You’re still here because we want you here. we are confident that you can add the most value to the business and you can help us get back on track.”

Choose your words carefully, using the right language to motivate and inspire and move forward.”

 

Is there a role for the business in helping people who have been made redundant to move on?

“I think that’s a good thing to do. Providing outplacement support doesn’t have to be expensive. Clearly, some people who are made redundant are very unhappy, very angry. They want nothing more to do with the company, and that’s fine. But some people would be very receptive to support and guidance in terms of preparing themselves for a new job.

Half a day of outplacement support can add a lot of value to someone looking for a new position, just to give them a few ideas about how they should present themselves, and that’s not going to cost the company a huge amount of money.” 

 

If businesses are still unsure or need help, who can they talk to?

“I’d advise them to talk to us! At People Puzzles we’re very happy to support and advise on all people matters. We provide a variety of offerings. We’re can simply speak to people on the phone, for instance if the company already has a process in place and they just want us to quickly check it out. Or we can get more heavily involved in the process, depending on what the client needs.”

If you’re currently considering making redundancies and would like some further help and support, you can get in touch with People Puzzles here.

 

About Nick

Nick spent 26 years in the corporate and legal sectors, before joining People Puzzles 7 years ago. As an experienced People Director and business consultant, he has helped more than 50 companies to overcome strategic HR and operational people-related issues. Most recently, he has been walking business leaders through the challenging redundancy process triggered by the global economic crisis.

 

Resources:

https://www.gov.uk/staff-redundant

https://www.acas.org.uk/redundancy

https://www.peoplepuzzles.co.uk/our-locations/nick-lawson-williams/