Legal lowdown: Getting redundancies right
Downsizing is sometimes a necessity. Keeping staff informed and managing the media will ensure you do it right
According to a recent Glassdoor survey one in three UK employees fear they will be made redundant in the next six months, and confidence is likely to dip further as we undergo Article 50 Brexit negotiations.
The reality is that in the current economic climate companies are having to downsize to survive. As such we are likely to see an increase in mass redundancies.
While a company may view reduction in headcount as the only means of survival, mishandling the redundancy process could jeopardise that aim. If the process is not handled properly the best staff, including senior management, are likely to jump ship – which can cause further instability.
So what can a business do to reassure staff during a redundancy exercise?
1. Keep staff informed
Employers are under a duty to consult with employees when redundancies are proposed.
Management should engage with staff as early as possible and avoid a situation where they hear about redundancies from external sources. Be sensitive about the way the news is conveyed. It’s often best to do this in person. Ideally the most senior person should make an announcement to all employees. A redundancy situation can lead to apathy and reduced productivity, so it’s important staff feel informed and valued during the process.
Key information that should be conveyed includes:
- Why redundancies are necessary – if the reason is cost saving it’s helpful to give details about the business rationale, as well as assurances that the changes are necessary to ensure a healthy business. Avoid giving vague reasons.
- How many jobs are likely to go – where an announcement is made that 500 jobs are to go many will read this as 500 people to be sacked. This is not always the case as the business may consider not replacing people who leave, or voluntary redundancies. It’s important to make this clear.
- Which departments will be affected.
- The basis on which individuals will be selected.
- Likely timescales – including details of the next stages and how updates will be communicated. Some companies announce they are making redundancies and months can go by before staff receive any update. Silence can generate unease and even paranoia.
- What the business will do to try and avoid redundancies.
- Options for redeployment.
- Advice about who employees can speak to if they have concerns.
2. Be visible
Senior managers should be visible and available. It’s important to keep the channels of communication open. Staff should feel they can approach management with their concerns. Lack of visibility following such an announcement is likely to cause further uncertainty and have a damaging impact on morale.
3. Manage the media
When high street retailer Woolworths went under staff first learnt they were to lose their jobs by reading about it in the press.
Be on top of what’s in the public domain and be prepared to address statements in the media. If staff are not kept informed by the business they are more likely to get their information from external sources, such as message forums and social media. External sources may not always be accurate.
Consider issuing a press release as well as subsequent updates. This will give the business an opportunity to control the information that is in the public domain and limit speculation. Press releases can also be used to spell out any positive results.
4. Publicise good news
It’s important to communicate positive news to staff. This can help lift morale. If the company has secured new contracts or won awards update staff in an internal newsletter.
5. Moving on following redundancies
Once the business has downsized it’s necessary to show those who remain that they are important to its future and success. Staff may feel relieved at keeping their jobs but still feel uncertain about the future. This is especially so where their team and/or role have changed.
Little things can go a long ways towards achieving cohesion, such as a team lunch and away days to encourage team bonding. It’s also a good idea to offer training to help people fit into new roles.
It’s important to restore the confidence of staff but also customers and other stakeholders, as the future success of the business depends on these people.
Taking the above steps can go a long way to maintaining the reputation of your business, the goodwill of staff and the future success of your business. It’s important to keep staff updated and informed.
Homa Wilson is senior associate and employment lawyer at Hodge Jones & Allen