Redundancy advice for both sides of the employment relationship

In the first of this two-part article series we shared some redundancy advice for employers going through a restructure or redundancy process.

In this article we will be presenting the legal options open to employers and employees when faced with the possibility of redundancies to help achieve a smooth process for both parties.

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

Inviting voluntary redundancies can help to reduce headcount without the need for compulsory measures. This is where a financial incentive is offered to steer employees towards voluntarily resignation. For example, an employee already considering terminating their employment then gets the opportunity to take the redundancy in the place of somebody who wants to remain with the business.

Part-time or job-share solutions may be useful alternatives to redundancy. A job-share involves two employees working flexibly to fulfil one role and is increasingly popular to those who want to maintain a better work life balance. It also helps to retain talent, if two roles were made one to save on salary, but both are willing to share the role it can prevent two skilled individuals looking for another job to instead dedicate both their valuable experience and skill sets to sharing the role. Making a role part time can also work well if employees are open to increasing their hours of work when the business situation improves.

Enhanced redundancy payments

Alternatively, employers may want to consider enhanced redundancy payments as an incentive to reach a negotiated exit with affected employees (where finances will allow). This means an agreement can be 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 and the risk to the employer of future claims. It can also be carried out confidentially as to 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 a redundancy. This is 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, rather than the standard terms of their employment contract.

Redundancy advice – avoiding them altogether

Through meaningful consultation, employers and employees can sometimes explore alternatives to 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.

In order for an employer to consult properly, they must have an open mind and carefully consider any counter proposals made by employees. Redundancies – or in worst-case scenarios, employment tribunal claims – can be complex, time-consuming, costly and something that both parties would want to avoid.

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 redundancy advice and support on any of the above issues, please get in touch.