WITH the economic downturn showing slow signs of improving, how do you correctly make redundancies?

Redundancy is one of the most traumatic events an employee may experience and it is no plain sailing for an employer either. Announcement of redundancies will invariably adversely impact on morale, motivation and productivity. Therefore handling redundancies in a sensitive and careful manner should help to reduce the negative effects on the redundant employees and those remaining.

A flawed procedure may result in costly claims for unfair dismissal in an Employment Tribunal at a time when the company can ill afford it There are three genuine redundancy situations: One, your business, or a part of it, may cease to operate; two, your business could move location; and three, your need for work of a particular kind may have ceased or diminished.

Establish a formal procedure on redundancy (if there isn’t already one). At a minimum the following stages should be considered in most cases: planning, invitation of volunteers, consultation (both collective and individual), identifying a pool for selection, use of an objective selection criteria and considering suitable alternative employment opportunities. Some employers may also wish to consider assisting redundant employees in seeking alternative work and/or obtaining training.

In your planning, consider measures such as reducing/stopping overtime, retraining or redeployment, short-time working and offering voluntary redundancy.

As part of the consultation stage it is important to adhere to ACAS’ guidance on fairness. Objective selection criteria, could include length of service, attendance records, disciplinary records, skills, competencies and qualifications, experience and performance records. (Last in, first out as a selection method is now risky and is not a satisfactory way of retaining the most skilled employees. Also, avoid criteria which could be seen as discriminatory e.g. by scoring part timers lower compared to full timers.

You must also, at all times, consider the possibility of suitable alternative employment for those affected. If and the employee unreasonably refuses, then they forfeit their right to a redundancy payment, which is calculated by using a set formula.

The maximum week’s pay is £380 and a maximum of 20 years service can be included in calculating the statutory entitlement. Minimum length of service for a redundancy payment is two years. However, employees who believe they have been unfairly dismissed, require one years’ service (although there are exceptions).

Any doubts? Then seek independent legal advice at the early stages.

* Gillian Markland is head of employment law at Ingrams Solicitors.