Are you considering making an employee redundant?

The Coronavirus pandemic has led many businesses to take the decision to furlough employees in an attempt to save jobs. 

 

Are you considering making an employee redundant? 

 

However, as a business owner you may find that it will become necessary to go further and downsize the business, even if only on a temporary basis. 

 

Certainly redundancies and restructuring have been prominent in the news in recent weeks, with high profile companies such as British Airways and Bentley both hitting the headlines. 

 

Are you considering redundancies in your business? 

 

We all know that employees are the lifeblood of a business and losing an employee with valuable skills and/or experience can have a detrimental and long lasting impact on a business. It is not surprising therefore that the decision to make redundancies is one that is not taken lightly. 

 

It is important to consider all options. 

 

Alternatives to redundancy may be to temporarily reduce working hours, consider lay-offs or even offer jobshare as an option. Some companies have given staff the option of taking a pay cut to save jobs. However, consent must be obtained in order to change a employee's contract of employment, otherwise you may face a claim for breach of contract. Any agreed variation to a contract of employment should be recorded in writing and signed by both parties. 

 

Another option could be to offer early retirement but you must ensure that you do not risk a claim for discrimination by offering early retirement to only older employees. 

 

If short term measures can be agreed then measures such as stopping overtime and halting recruitment can help a business through a prolonged period of difficulty. 

 

However, if redundancies are the only realistic option then it may be worth considering whether voluntary redundancies would achieve the desired effect. If you do decide to do this you must ensure that the offer is made to the entire workforce and no one is singled out. 

 

Once a decision to go ahead with redundancies is made the process itself must be handled correctly as failure to do so can lead to a claim for unfair dismissal. 

 

If you do decide to make an employee/employees redundant I would recommend that you consider asking them to sign a settlement agreement so that they agree not to bring any claims in the employment tribunal - which would include unfair dismissal, discrimination and breach of contract. A tribunal claim - whether successful or not - can have a devastating impact on an organisation, especially on micro-businesses and charities that have limited resources. The financial cost of defending a claim - whether successful or not - can far exceed the cost of taking professional advice, not to mention the stress and time involved in dealing with the litigation which would otherwise be spent on the business. 

 

In my next article I will outline what steps must be taken when making an employee redundant. In the meantime, if I you need advice with the redundancy process or just to discuss your options in more detail telephone 01925 937070 or email me at diane@dsmlegal.co.uk.