Managing the end of the employment relationship

Managing the end of the employment relationshipIn the first part of this two-part article we considered some points for employers going through a restructure or introducing redundancies to keep in mind throughout this process on the planning, principles and people involved.

In this article we will be considering how important and valuable it is for both employers and employees to have full knowledge of all the options open to them when faced with the possibility of redundancies.

Understanding all options

Depending on the circumstances the business is operating in and the individual situation of the employee, there can be a number of potential ways to approach a restructure or a round of redundancies. A full appreciation of all the options available can enable employers to retain loyal and valued staff whilst providing the employee with some acceptable alternatives.

Inviting voluntary redundancies or amended terms

For example, inviting voluntary redundancies can help to reduce headcount without the need for compulsory measures. Part-time or job-share solutions potentially using further Government support measures could be introduced, particularly if certain staff are likely to be needed when the economy recovers. 

Enhanced redundancy payments

Alternatively, employers are increasingly considering enhanced redundancy payments as an incentive to reach a negotiated exit with affected employees (where finances will allow). Where an agreement is reached and the employee signs a confidential settlement agreement (see below) accepting the termination of their employment, this then avoids the need to carry out a lengthy consultation process without the risk, to the employer, of future claims. It can also be carried out confidentially so it does not affect the morale of the wider workforce and can include an agreed reference and announcement for the employee.

Settlement agreements

Settlement agreements are used by businesses as a method of settling any employment claims that an employee may have against their employer (including in relation to the redundancy) and to agree the arrangements surrounding the termination of the individual’s employment. A settlement agreement is often an attractive option as it can provide certainty and a ‘clean break’ for both parties. The process itself can be concluded relatively quickly compared with a full redundancy consultation.

For their part, and where redundancy is unavoidable, an employee may find that a negotiated exit, through a settlement agreement, would deliver a better outcome for them than the standard terms of their employment contract.

Avoiding redundancies altogether

There is even perhaps the possibility of avoiding redundancies altogether. In order for an employer to consult properly, they must have an open mind and carefully consider any counter proposals made by employees. It is important to remember that redundancy is not personal; it is about the need for the role and not the individual’s performance or conduct. Through meaningful consultation employers and employees can explore alternatives to hopefully find a solution that avoids the need to make the employee redundant. Often, through this type of dialogue, a creative or resourceful solution can be found that works for both parties.  Redundancies  – or in worst-case scenarios, employment tribunal claims – can be complex, time-consuming and costly and something that  both parties would want to avoid.

The months ahead will hold challenges for many employers and employees across a broad range of sectors. A knowledge of all the options available to both parties in negotiating a change to or the end of an employment relationship is the best way to conduct the process amicably and safely.

If you are an employer or an employee who would benefit from some advice and support on any of the above issues, please get in touch.

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