This is a term that has been used for quite some time. It is a ‘polite’ word for the process of sacking staff, usually in order to reduce overheads. Alternatives are 'Change Management Exercise', 'Redundancy Project', 'Business re-organisation', 'Downshifting', 'Business Process Re-engineering' 'Rightsizing'...
In today's working environment downsizing is a very common occurrence but our experience over the past few years shows that whereas downsizing used to always involve significant numbers of staff, nowadays there is a lot of regular 'trimming' that occurs which involves perhaps just a few staff at a time to ensure an organisation maintains a lean approach.
The legal process for downsizing is onerous, therefore take care not to expose your business to unnecessary financial risks. Always check your understanding of the current process required.
Can I lay-off my staff rather than go through redundancies?
If you are suffering from a short-term downturn in orders do you really need to make staff redundant? If you have a lay-off clause in the employment contract then it may be more appropriate to lay staff off until the orders pick up. One note of caution, lay-offs can only be used as a short-term solution. If the period is considered too long then the business could be at risk from claims of forced redundancy, which could prove costly.
When can I use redundancy to reduce my staffing levels?
Redundancies must be for genuine business reasons and not used as a quick fix to a staffing problem. There are specific statutory requirements for redundancy covered under the Employment Rights Act -failure to follow statutory guidelines or your the business' own redundancy policy if it has one, could result in a claim for unfair dismissal, plus there may be extras claimed such as one or more of the discrimination laws.
I would like to make a couple of people redundant but I do not have a redundancy policy. What do I need to do?
The statutory redundancy process would apply. In brief, the business will need to identify the business reason for redundancy and the staff that may be affected, arrange meetings known as collective consultation, followed by further meetings with individuals (individual consultation). The purpose of each meeting is to communicate the business plan and selection process and request that employees come up with alternatives to redundancy. Make sure you document everything so that you have a clear audit trail. If you would like a redundancy policy added to your staff handbook, why not give us a call?
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