Managing the impact of redundancies

Jemma Pugh explains how employers can best manage the fallout of the redundancy process, while still making sure it is legally compliant

Deutsche Bank recently hit the headlines after announcing a large-scale redundancy programme potentially affecting thousands of employees. We doubt they will be alone in this; recent reports suggest a post-Brexit recession, and so it is likely that many businesses will have no other option but to tighten their belts.

Redundancies are rarely easy for either party. Employees are concerned by the potential financial challenges, the perceived stigma of redundancy and the necessity of finding new work. Employers are often looking to minimise disruption to their business, reduce costs and avoid legal claims.

Many businesses view a successful redundancy process as one that is legally complaint. However, it is easy to overlook the human aspects of such a process. Mental health is, quite rightly, currently at the forefront of many employers' minds, with wellness and promoting positive mental health in the workplace near the top of the agenda. You do not need to be medically qualified to understand that the prospect of redundancy and unemployment can induce and exacerbate anxiety, depression and other mental health illnesses. 

This could be particularly so where an employer is proposing to make 20 or more employees redundant within a 90-day period, as this triggers collective redundancy consultation obligations. Collective consultation must last for at least 30 days before any staff members leave the business (or 45 days if there's 100 or more employees affected). While this legislation is without doubt in place to protect employees, it is possible to see how an elongated redundancy procedure could be more stressful and difficult in practice.

What can employers do to assist employees?

  • Communication: many employees are anxious as they have little visibility of the process. Outline the key steps and deadlines and provide a Q&A that addresses some of the most common questions, such as termination payments.
  • Support: those going through the redundancy procedure should be given an appropriate level of support, with named managers and members of HR acting as mental health champions. Employees should also be directed to any external support that can be offered, such as employee assistance programmes, via any private medical insurance or occupational health providers, or speaking to their GP about talking therapies.
  • Once redundancies are confirmed: affected employees can be supported with outplacement services, recruitment workshops or open days and, where financially viable, enhanced redundancy packages. Don't forget that employees are entitled to take reasonable time off during working hours to look for a new job or to arrange training for future employment, some of which should be paid.
  • Recognise that others can be affected: remember that it's not just those employees who are being made redundant that may be struggling; reducing the number of staff can in some circumstances result in an increased workload for others, even if there is a reduced requirement for work overall. A shake-up and change in the workforce can also impact on colleagues and, in turn, the business. Employers should also be mindful of those managers who are leading the redundancy meetings and any employee representatives. Consider training for these individuals so that they feel well versed to undertake these challenging tasks. 

What happens when this goes wrong? 

If someone is stressed by a particular event, such as redundancy consultation, this is quite normal and, provided it is short term, is unlikely to qualify as a disability for the purposes of the Equality Act 2010. That said, employers should be aware that mental health conditions can amount to a disability and they have specific obligations towards those employees, such as a duty to make reasonable adjustments. It would not be lawful to select a particular employee for redundancy because they have a disability (or on the basis of any other protected characteristic).

Furthermore, employers need to bear in mind that employees with two years' service or more are protected from being unfairly dismissed and so employers need to ensure that (a) there is a genuine redundancy situation; and (b) a fair procedure is carried out in effecting any redundancy. A failure to inform and consult in collective redundancy situations can also carry a penalty of up to 90 days' gross pay per employee. 

Jemma Pugh is an associate at Wedlake Bell