An ACAS poll has found that 2 in 5 (41%) large businesses are likely to make redundancies in 2023 and 1 in 5 (20%) small and medium sized (SME) businesses said that were likely to do so.
ACAS has urged employers that find themselves with no other option than to embark on a redundancy process to make sure they follow the strict rules to ensure a fair process.
How to conduct a fair redundancy process
If an employer finds there are no other choices than to make redundancies, then there are strict rules on consulting staff that they must follow.
A collective consultation exercise is required where employers plan to make 20 or more redundancies. Consultation represents an opportunity for employers to explore other solutions to their situation through meaningful discussions with their staff, employee representatives and unions. Consultation also allows the employee to comment on the basis for their selection, both in terms of the pool of potentially redundant employees and the selection criteria.
If an employer does not meet consultation requirements, employees can take their employer to an employment tribunal. If successful, the employer may have to pay up to 90 days’ full pay for each affected employee. A redundant employee can also claim unfair dismissal to an employment tribunal on the grounds that they were not consulted, or the consultation was not meaningful.
A transparent selection criteria
If an employer does opt to make redundancies, they must apply a reasonable selection criterion which may involve pooling and scoring employees to decide which are redundant.
There is a lot to consider when choosing and applying selection criteria and this aspect of the redundancy process is often scrutinised in the tribunal. Unfairly devised or applied selection criteria can result in various employment claims, including unfair dismissal and discrimination. It’s therefore vital for employers to be clear about what criteria they will measure against and how employees will be scored. Doing so will ensure the employer is in a stronger position to defend against any challenge.
To be reasonable, the redundancy selection criteria should, as far as possible, be both objective and capable of independent verification. This means that the criteria should be measurable, rather than just being based on personal opinion. The criteria should also be discussed with the selected employees at the start of any consultation exercise.
Importantly, employers should make certain they are open and honest about the position of the business throughout the entire redundancy process, breaking down any difficult barriers and ensuring employees feel as if they are valued and heard. Organisations that fail to handle redundancies with compassion are more likely to see employees contest their dismissal.
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