The statistics revealed that between April 2008 and March this year unfair dismissal claims were up 29% from the previous year, redundancy pay cases were up 48% and failure to inform and consult claims in respect of redundancy were up a staggering 250%. Many organisations facing a second (or even third or fourth) wave of redundancies before Christmas will be anxious to ensure that they do not become part of this year's statistics.
It may sound trite, but the best way of avoiding claims is not to dismiss staff. This was an approach taken by many organisations in the early part of this year. Creative alternatives to avoid redundancy were proposed and accepted by both employers and employees alike in a newfound spirit of co-operation. Six months ago barely a day seemed to pass by without reports on the news of businesses taking innovative steps to reduce costs without reducing headcount. These included redeployment, job shares, reduced hours and benefits, unpaid sabbaticals and extended holiday entitlement, as well as the more straightforward cuts to basic pay. However, the mood now seems to have changed and this is reflected in a recent report by the British Chamber of Commerce which confirmed that 50% of businesses are either certain they will have to make staff redundant in the next six months or are considering such action.
What has prompted this sea-change? Most likely it is a combination of organisations not having realised the necessary costs savings from these alternatives to redundancy and employees not being able to afford to agree to further cuts. With the recession apparently here to stay, it has become clear that those early cost-cutting steps are simply not enough. The recent reports about British Airways facing possible strike action typify this change of tack. Earlier this year the chief executive of British Airways, Willie Walsh, asked staff to follow his lead and work for a month without pay and many did so. However, the airline has now announced it will be cutting up to 1,700 jobs (by offering voluntary redundancy to 1,000 cabin crew and by getting a further 3,000 employees to work part-time), as well as introducing a two-year pay freeze to cabin crew.
If further redundancies are inevitable then companies would be well advised to face up to that fact sooner rather than later and take the necessary steps to ensure that these are handled fairly and properly and that they do not contribute to the Tribunals Service's statistics for next year. Employers should start thinking about how they will handle significant redundancies at least three months before they anticipate these will need to take effect. These preliminary steps will include reviewing existing policies and procedures or establishing new ones, understanding the applicable law, and equipping those involved in the process with the necessary information and training to deal with both individual and collective redundancy situations. Planning this far ahead also means that organisations can minimise redundancies by taking advantage of natural wastage and cutting back on recruitment and temporary staff.
However, where most organisations get it wrong is in their interactions with employees during the redundancy process. As well as being legally required, good communication is essential, not just to ensure employees understand the reasons why headcount reductions are necessary, but also to listen actively to employees' proposals regarding the redundancy process and, where appropriate, act on these.
Unfortunately, whether implementing further costs savings measures or reducing headcount, businesses should be prepared to face some backlash from employees. Those at risk of redundancy will have seen colleagues made redundant earlier this year still struggling to find work and be very aware how difficult it will be for them if they are made redundant. Employee resistance to further headcount reductions will be particularly likely, and vocal, if organisations sought to reassure staff who agreed to cuts earlier this year that it was not expected that there would be any need for further action. It has become a cliché to say that the current economic climate is unprecedented, and in such times it is critical to businesses' survival to "never say never". Although employees may again seek such reassurances this time round, a sensible employer will be careful to give as positive a message as possible while keeping all options open for the future.
Ann Bevitt is a partner and head of employment at Morrison and Foerster