What should HR know about mass redundancies?
Jo Gallacher, October 09, 2020
The UK government has hinted it will be announcing the introduction of a traffic tiered system for local lockdowns, placing more pressure on businesses to balance the books.
No sector has been left undamaged by the impact of the coronavirus pandemic and inevitable economic fallout. This unfortunately has led to many businesses, including household names such as British Airways, John Lewis and most recently Cineworld, forced into making mass redundancies as stores are closed and flights are grounded.
Earlier this month, figures from the Office for National Statistics (ONS) reported that the number of redundancies in the UK had accelerated at the fastest pace since the financial crisis in 2007-2008, with 156,000 people being made redundant in the three months prior to July.
Redundancy is one of the hardest elements of the HR job description, but having to have ‘that’ conversation on a mass scale during a global pandemic contains a whole host of new challenges.
If there are 20 to 99 employees proposed to be made redundant, a minimum consultation period of 30 days must be carried out. This is extended to 45 days if there are 100 or more employees.
We’ve pulled together some advice from a host of experts on what to expect during this difficult period.
Consider the hidden costs
Adam Penman, associate at McGuire Woods, says businesses should undertake a comprehensive cost-risk analysis of redundancies at the outset.
He says: “Making large-scale redundancies is likely to be an expensive exercise in terms of contractual and redundancy payments. Employees who have yet to cross the two-year service threshold will not be entitled to redundancy pay or have unfair dismissal rights and accordingly could be more efficient to dismiss.
“HR teams should always be alive to the pecuniary risks of potential discrimination claims however, as selecting employees for dismissal based on length of service is likely to be indirect age discrimination.”
No case is the same
Liz Sebag-Montefiore, director and co-founder of consultancy 10 Eighty, recommends both HR and managers consider any personal, sensitive, health or family issues.
“In redundancy consultation you need to get feedback and input from affected employees and seriously consider this information; this is much easier if your managers have established good relations with their teams and understand their circumstances,” she says.
“Redundancies are stressful for the whole organisation including those left behind but bear in mind that everyone will be affected and react differently, and you need to support your human capital to minimise the damage done."
Like most HR practices, communication throughout the redundancy process is key for all parties.
Penman adds: “Communication is important both internally and externally – for example to shareholders and investors. Internally, employees not at risk of redundancy will have anxiety about job security and adjustments in the workplace. Managing messaging will be key to business’ commercial reputation and perceived viability.”
Lucy Twomey, HR and legal team advisor at Make UK, advised HR not to use any coded or complicated language.
She says: “Dressing up a difficult message in veiled or coded language such as ‘you might want to think about’ rather than ‘you must’ significantly increases the risk of misunderstandings. These will potentially open the door to procedural problems and legal claims so be concise and use plain English to keep your communications easily understood by all, particularly employees with learning disabilities or for whom English is their second language.”
Make UK has also produced a Redundancy Toolkit to help HR specifically navigate the complexities of COVID-19.
Don’t give false hope
Twomey adds: “It’s easy to feel under pressure and give false hope when you want to be kind. Equally, in expressing your own disappointment, you might give the impression that redundancy, for example, is a foregone conclusion. Ultimately, this doesn’t serve the employer or the employee well.
“It could also lead to various legal liabilities such as unfair dismissal claims or, in collective redundancy cases, protective awards. Always show compassion but try to avoid expressing your own personal opinions. Focus instead on the actual support that you are able to give to employees like outplacement for redundant employees.”
Ask if there are any alternatives
Commenting on the news that Cineworld will be closing 127 cinemas Daniel Stander, employment lawyer at Vedder Price, said businesses should try to consider other options to redundancy.
He said: “Some alternatives to mass redundancies at this stage which Cineworld could consider include exercising any contractual lay-off provisions, mandating the taking of annual leave or seeking volunteers for unpaid leave. There is no silver bullet to avoiding further job losses, however where employers can take action to reasonably avoid mass job cuts and give themselves the best chance of recovering when the sector picks up again, they should do so.”
“The government’s Job Support Scheme is unlikely to be of help in this case given Cineworld is proposing to close its doors, as one of the requirements in order to be eligible is that the employee works at least one third of their contracted hours.”
Employers also have a duty to look for suitable alternative employment. If they do not do this, it could mean the redundancy dismissal was ‘unfair’.
Craig McCoy, interim HRD and chair of London HR Connection, said it is critical that a clear business case is shared with employees. “HR should set out the reasons for redundancy, any alternatives which have been explored and why the layoffs are unavoidable.
“Senior leaders and line managers need to own the rationale and process, supported by HR, and be visible and accessible- showing true leadership.”
It may not be the end of the road
Katy McMinn, co-founder of HRi, says anxiety for HR will be extra heightened and it can be hard to think objectively.
She says: “A good tip to remember for HR professionals, and perhaps that little bit more personal to them, is that this is farewell but not goodbye. Making good staff redundant that everyone would prefer to keep is always going to be hard, but it needn’t be the end of the relationship.
“HR may wish to create an alumni group for the organisation, or even a simple Facebook group, to stay in touch with those that have left and who may be brand ambassadors, or indeed work for the firm again. Keep contacts close as you never know what could happen next.”