Understanding redundancy

While there is no such thing as a ‘good’ redundancy, there are ways in which the process can be made smoother. Helen Tracey explores how businesses can be prepared to handle redundancies in the best way possible.

Although national redundancy levels fluctuate, tending to peak in times of economic recession, they are, thankfully, still a fairly uncommon occurrence. Despite this, redundancy is something that organisations need to ensure they are fully prepared to deal with. 

In the first instance, this involves preventing redundancy from occurring, wherever possible. Clearly this is a wide objective linked to good organisational management. However, with regards to HR, prevention includes actions such as providing re-training and opportunities for redeployment. Secondly, if redundancy becomes inevitable, despite attempts to avoid it, the process by which the redundancies are made should be fair and transparent. This not only protects the organisation from legal action, but provides reassurance to everyone involved, both those who will leave and also anyone remaining.

These two key areas should be set out in a redundancy policy and procedure which is agreed with employees, and their representatives where relevant. Undertaking this important groundwork in advance, ensures that the organisation’s commitment to fairness is set out in writing. Thankfully, the law is clear regarding how redundancies should be handled, providing a basis for this policy and procedure. However, good employers will want to consider going above and beyond the minimum requirements set out in the legislation. 

While there is no such thing as a ‘good’ redundancy, there are ways in which the process can be made smoother. The legislation hints that the key is good communication. While it may be tempting to want to spare employees the pain of possible redundancies until it’s a foregone conclusion, this can be more damaging. Not only can this break all-important trust at the early stages; potential solutions that can turn the situation around can also be missed without employee involvement. The expected decline in performance once redundancies are announced often doesn’t materialise when employees feel connected to the organisation in this way. The open culture required to make this a reality is often also much easier to achieve in a small organisation. 

Financial concerns can be the biggest worry for small organisations, who may not be able to afford to use their discretion to increase redundancy payments above the statutory minimum levels. However, bearing in mind that the purpose of these payments is often to support employees until they find alternative employment, there are other non-financial ways in which an employer can help. Again, this can go beyond the legislative requirement to provide at risk employees with paid time off to re-train or look for work. Employers can use their existing connections with customers and suppliers to try to source vacancies, provide letters of recommendation and support with developing CVs. This is especially important for long-term employees. Redundant workers can be signposted to information about potentially starting their own small business, or in the case of a total organisational shutdown, a group of employees may be interested in taking over the business as a worker cooperative. This demonstrates that a fairly rare situation like redundancy calls for a little thinking outside the box. 

While redundancy is a difficult time for everyone involved, employees can be helped to move onto a suitable alternative role without damaging the reputation, or legacy, of their former employer.

Author: Helen Tracey is Senior Lecturer in Leadership and Human Resource Management at Northumbria University.

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