An Employer’s Guide to Redundancy Planning

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Many business owners are currently saying the same thing, namely that the Coronavirus Job Retention Scheme (CJRS) has been a lifeline in the short term but sadly they are still forced with making drastic cuts across their businesses, this includes the prospect of redundancies.

Here at Avensure we understand the needs of businesses across all sectors and of all sizes but we are particularly experienced in supporting small businesses.

In this article we look at how to prepare for tackling what can be a very daunting prospect. We focus on how to plan for redundancies, what things you need to consider and the information you will need to start pulling together so that, together with our experts, we can work with you to alleviate the inevitable stresses of redundancies and crucially help you to avoid those legal pitfalls.

For information on the redundancy process please revisit our ‘Redundancy – An Essential Guide for Employers’ article from last year.’

Preparing your business case

Sometimes referred to as a ‘business rationale’ this is a very important first step in planning for a redundancy process and it is something we here at Avensure ask our clients to provide.

This document is very important because it sets out the business reasons for needing to make reductions in the number of staff and it will form the basis of your redundancy consultation.

What does a business case need to include?

Think of your business case in two parts:

Part 1 is who you are and where your business is at.

Part 2 is what you need to do to remedy the problems outlined in part 1.

Part 1

Start by giving a brief outline of the type of business you are, the size of your business, how long you have been operating, where you are based and so on. Just a brief introduction about your business.

You then set out the difficulties you are facing, what attempts have been made to reduce costs to date (e.g., moving to a smaller premises) and why reducing staffing levels is now necessary for the survival of your business.

Part 2

This sets out how many redundancies you need to make.

If there is a cost saving by making redundancies, what will that saving be?

If some roles are affected more than others, why is that?

If any work carried out by employees at risk of redundancy is to remain, where will it go, who will carry it out?

If it is to be absorbed by other staff members, which ones and why?

Please avoid setting out who you want to lose. I know that’s easier said than done and its natural to want to keep your best staff but at this stage remember it is the role that is redundant not the person. If personal concerns about a particular individual (such as poor conduct, attendance etc) start to creep into your business case then it becomes less about your business needs and is a sure fire way to find yourself carrying out an unfair or biased redundancy process.

If you have an organisation chart by all means include this, you can also include an organisation chart for how you envisage the business to look after the redundancy process has been carried out- please don’t include individual names on this document.

Do you need to see our accounts?

No. If like most businesses at the moment, you are faced with a significant reduction in revenue then confirm the amount of the losses incurred. You need not go into masses of detail, as an example you may want to state where your business profits or work levels were 12 months ago versus where they are now.

I haven’t got time to prepare this, is it really necessary?

Yes. As the saying goes ‘to fail to prepare is to prepare to fail’.

It needn’t be a very lengthy document and of course our experts are on hand to help guide you. Please try to set out your business case on a separate Word document and please don’t forget to tell us if you recognise any Trade Unions.  

I can’t stress enough the value in this document. It will help you to get a clearer idea of your business needs and it will also make sure we can tailor our expert advice to suit the needs of your business.

What about a list of my staff?

Yes. We will need to see a list of all your staff.

This should be provided on a separate document and needs to include:

  • Names
  • Job titles
  • Start dates. Please include any previous employment the person may have had with you such as if they worked for under a temporary or zero hours contract. If you inherited employees following a takeover under the TUPE regulations, then make sure you include their original start date with the company.
  • Dates of birth
  • Other relevant information such as:
    • Indicating if anyone is on long-term sickness absence
    • If anyone is on maternity/paternity/adoption/parental/shared parental leave

Please ensure that you include everyone, even those who you do not envisage being at risk of redundancy.

What if I need to make redundancies at one of my establishments but not at another?

If you have any other businesses at other sites please let us know. Even if they are technically separate legal entitles.

We may not need to involve staff at other sites, but we need to be aware of them. Again, this is to ensure that we are advising you diligently.

Finally, once we have received your business case and staff list, we will advise you on commencing your consultation and at every stage in the redundancy consultation process. We will provide bespoke correspondence for your staff and ensure you are aware of what you need to cover at each stage of your redundancy consultation.

Please ensure that you seek advice from our experts as there is not always a ‘one size fits all’ answer to a lot of these scenarios and mistakes will be ever more costly for your business in the current climate. Please quote your Client Account Number on all correspondence and telephone calls. 24-hour client advice line: 0800 151 2935