Redundancy – getting it right

Making staff redundant is difficult enough, but you also need to ensure you follow all the correct procedures, which is when the services of an outside HR consultant can be invaluable to help you through the legal minefield.

The economic downturn has seen an increasing number of companies in the water industry’s supply chain having to face up to the loss of staff.

But redundancy law is complex and getting it wrong can be costly, particularly if you end up in an Employment Tribunal.

Over the last few months John Stacey from ProjectHR has been advising construction and process contractors on all aspects of employment law, with a surge of employees and employers requiring redundancy advice.

“If you are under 40, you may not have had to implement cutbacks before,” says Stacey. “For many managers, it’s a completely new area.”

ProjectHR recently helped a major water company supplier in Scotland that did not realise it had to follow the statutory dismissal procedure for what it saw as a straightforward redundancy.

“They genuinely ran out of work for six staff,” explains Stacey, “but they did not consult in line with the law and soon received a legal letter.

We were able to respond to the letter and resolve the lack-of-consultation issue, averting an automatically unfair dismissal finding in tribunal that could have cost several thousands of pounds.”

Stacey explains that when making people redundant you have to consult with staff, consider measures other than redundancy, determine selection citeria, apply these fairly and consult with those affected, otherwise it could be deemed in a tribunal as being unfair and unreasonable.

Case law

Staff consultation, he stresses, is a key part of the process, as there are legal requirements if more than 20 redundancies are involved, with individual consultation being embedded in case law.

ProjectHR has also had to advise a construction company in the South-east, which wanted expert advice after a civils contract at a water treatment plant was postponed.

Stacey comments: “Unfortunately, the bottom line meant redundancies. Without help they could easily have missed one of the step-by-step actions in what is quite a complicated process, including the myriad of people-issues that arise from these situations.

“Like many, the construction company was very worried about what words to use, how to deal with questions and how to deal with employee anger or tears. In my opinion, it is the most difficult task a manager faces.”

He adds: “In what is already a very stressful situation, it is very, very tough to look a valued employee in the eye and break the news to them. We supported this relatively small construction company with scripts and appropriate answers to questions. We also conducted rehearsals and sat with them through the telling of this difficult news, as well ensuring that the process was handled as professionally and as sensitively as possible.”

Stacey says that where funds allow, a company should offer redundant employees help with their CVs and provide interview-coaching as part of a package. He believes a great deal can be achieved in six to eight hours of coaching-time and says it does not cost that much.

It helps ease the process and gives those made redundant a more positive feeling about the employer.

“This can also be very well received by the staff remaining in the organisation,” he says. “They may have feelings of uncertainty about their own future and be hearing rumours and losing motivation.

“But at least they can witness an employer who has been as fair as possible to their former work colleagues, which reduces bad feeling and helps move the company forwards to better times.”

A managing director of a sewage-treatment pump and tooling company in the North-west comments: “I had to make a part of my workforce redundant and didn’t know exactly how to go about it. It was such a difficult thing to break the news to people I had employed for many years. In addition, I knew of others who had ended up in tribunals.

“We had less than 100 staff and I didn’t want, or have the finances, to employ an HR person, as the focus was to reduce cost not increase it. ProjectHR gave me specialist advice, help and assistance throughout the process without the full-time cost.”

Reduce costs

According to Stacey, there is a growing trend in the water industry for employers to use HR consultants because it is cost effective, and they can pay as and when required. ProjectHR has seen its business double in the past 12 months as companies move away from in-house HR employees to use the services of experts as and when they need them.

“However, while redundancies in this type of market are inevitable, after we have helped companies to reduce costs we then focus on areas where they can improve productivity or sales. Even in this recession there are opportunities to grow,” says Stacey.

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