Due to the impact of the current global financial crisis, employers are considering how they will maintain stability in their business. Reviewing operating costs, and in particular the workforce, will be high on their priority in 2023.
It is good practice for employers to regularly consider the impacts external factors are having on their operation, and to find ways to adapt to ‘weather the storm’. As part of these considerations, job losses may inevitably become part of these discussions.
When considering job losses, the employer should consider following the correct redundancy process and ensure there is a genuine reason behind the redundancy situation. The cost of getting this wrong could make the dismissal unfair and could result in a claim capped at either 52 weeks of gross pay or £93,878, whichever is lower. Where a redundancy situation is not genuine e.g. the employer wants to find a way to remove the employee from the business linked to conduct or capability, this can be seen as a ‘scam redundancy’ and therefore the employer opens themselves up to a possible tribunal claim, and any related bad publicity in how they conducted the layoff situation.
The way that the employer manages layoffs will make a big impact on their reputation. Speaking of reputational damage, you may recollect the press reporting in March 2022 that P&O had not followed the legal requirements under redundancy therefore making the process automatically unfair under the Employment Rights Act 1996. More recently, in November 2022, where it was reported that Twitter employees woke up to find that they had been locked out of their work accounts and then advised via email they were to be laid off. It was reported that both businesses instigated redundancy measures due to their financial position. The way in which both businesses responded and the impact to the treatment of their employees is the legacy that people remember. This can obviously have a long-lasting impact to reputation and impact their ability to recruit and retain employees in the future.
Whilst going through a redundancy process is a highly subjective and challenging situation, if the employer manages this process in a fair way, providing support and clear information to the employee throughout, then this can support the ongoing relationship. Employers would be wise to remain aware of the challenging recruitment market as well as the growing trend of ‘bounceback employees’, who are employees returning to a former employer.
It is also important to consider the ‘redundancy survivors’ who are employees remaining in the business and the emotional impact that redundancies have on these individuals. These individuals may feel less secure in their role, anger of the loss of colleagues, and as a result look outside of the business for new opportunities. A strong redundancy process will also include these employees informed and supported throughout.
In our ‘Redundancy Special’ week at Nockolds HR, we will be taking you through a week of redundancy related articles which outline each stage of the redundancy process. Coming up later this week:
- Alternative options to redundancy
- Planning a redundancy process, and;
- Closing the redundancy and providing outplacement support
Please contact us via email enquiries@nockoldshr.co.uk or call 0345 6460406 to speak to an experienced HR Consultant. Nockolds HR – Restructures and Redundancy