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Redundancy: top 10 pitfalls for employers

Employers' Law30 June 2010 10:34This article first appeared in Employers' Law magazine. Subscribe onlineand save 20%.

The pundits may be telling us the recession is past its worst, but redundancies are still having a huge impact. And there's more to making someone redundant than handing them a letter and waving them off. Here are our top 10 redundancy pitfalls.

1. Defining the pool for redundancies incorrectly

The first danger here is that the employer can define the redundancy pool too narrowly. This was shown in Highland Fish Farmers v Thorburn, where the Employment Appeal Tribunal (EAT) ruled the former had acted unreasonably in treating two fish-farming sites separately for the purposes of redundancy selection.

Employers also need to guard against 'bumping' redundancies – where an employee whose job is not at risk is dismissed. This can lead to discrimination, as seen in Leung and another v Elements Oriental Buffet House, where two employees were successfully bumped out of their jobs 'in favour of men from another workplace who were in their 30s', as the employment tribunal notes.

They successfully claimed unfair discrimination and unfair dismissal.

2. Not offering suitable alternative employment

Employers are obliged to identify suitable alternative employment for the redundant employee, and to avoid expecting them to accept an alternative, but unsuitable, role.

In Sturdy v Leeds Teaching Hospitals NHS, an employment tribunal found the employer unlawfully discriminated against senior NHS manager Linda Sturdy during a reorganisation, by failing to appoint her to a new position for which she was well suited. The trust was also found guilty of victimising Sturdy when she persisted with complaints about her treatment and refused to take up a post at a significantly lower level. She ultimately won £33,500 for injury to feelings.

Another potential pitfall is failing to give preference to an employee on maternity, adoption, or additional paternity leave when there is suitable alternative employment available.

• Does an employee made redundant while on maternity leave have any special rights?
• Where a redundancy will take effect before a woman goes on maternity leave is she entitled to preferential treatment with regard to being offered suitable alternative employment?

3. Absence of a genuine redundancy situation

Less principled employers may see an economic downturn as a great opportunity to get rid of underperforming staff. This is to be avoided at all costs – an employer failing to prove there is a genuine redundancy situation could end up facing a charge of unfair dismissal.

• How do the courts define redundancy?
• Are there any circumstances in which redundancy as a reason for dismissal can be disputed?

4. Failure to carry out a fair selection procedure

To prove a role is genuinely redundant, employers must carry out a fair selection procedure, using transparent, consistent and objective redundancy selection criteria. They should avoid choosing an individual for redundancy because of a characteristic such as pregnancy, age or length of service.

• Is 'last in, first out' still a valid redundancy selection criterion?
• Can an employee with less than a year's service who believes that he or she has been unfairly selected for redundancy bring a tribunal claim?

5. Failure to consult properly on collective redundancies

It's not enough just to carry out consultation. It must be done correctly, and employers should take particular care to avoid:

• Failure to consult on collective redundancies
• Failure to consult in time on collective redundancies
• Failure to consult when making a group of employees redundant due to assuming they are not working at "one establishment"
• Failure to consult on the reason for the redundancy situation in a collective redundancy situation.

• What information must the employer disclose prior to redundancy consultations?
• What should redundancy consultation be about?

6. Failure to inform and consult on an individual basis

The individual obligation to consultation arose out of the statutory right not to be unfairly dismissed. Under section 98(4) of the Employment Rights Act 1996, an employer must act reasonably when treating redundancy as a sufficient reason to dismiss an employee – consultation is almost always an integral part of the process of acting reasonably. An employer failing to inform and consult could face an unfair dismissal claim with compensation of up to £65,300.

7. Failing to consider alternatives to redundancy

Employers leaping onto the redundancy bandwagon leave themselves at real risk of being left ill-equipped for the upturn. By failing to consider alternatives to redundancy, they may end up losing skilled and valuable employees, maybe even finding themselves short-staffed.

• How to consider and handle alternatives to redundancy in an economic downturn

8. Not training managers in how to carry out the redundancy exercise

While HR can slink off to its own department once a redundancy announcement has been made, it is up to line managers to cope with redundant staff in the run up to their departure.

• Line manager briefing on individual redundancies
• Line manager briefing on collective redundancies
• Good practice on assisting redundant employees

Lacking the skills and experience to do so effectively and compassionately will make the situation worse for all concerned – including 'surviving' staff.

Communication is key – employers must make sure everyone involved, particularly those being made redundant – hears the news in a timely and appropriate fashion, through the right channels. This is especially important today when so many people use social media for instant communication.

9. Not accounting for the extra costs and resources involved

Redundancy does not begin and end with breaking the news. Employers should be very careful to allocate resources – both time and money – for the duration of the consultation period, and often beyond. It's worth also considering the potential for challenges to the redundancy in employment tribunal.

10. Failing to account for the wider effects of the redundancy exercise

It's inevitable the staff left behind – the survivors – will suffer from low morale, lower productivity and possibly even increased absence.

They may even suffer 'survivor guilt'. Employers should never underestimate the impact redundancies can have on remaining staff.

Brand reputation is another intangible that is, nevertheless, as important as any of the more visible factors – as is employer reputation. Will suppliers want to continue to do business with a company they feel has mistreated staff? Will potential employees want to work there? A damaged brand is very difficult to repair.

Employee engagement guidance prepares business for recovery

Employee engagement guidance and best practice information to help businesses make the most of their people during the upturn has been introduced by the government.

Full article here

One-third of executives fear low employee engagement will lead to a loss of talent

Almost one-third of executives fears low levels of employee engagement and trust could lead to the loss of key talent when the economy recovers, new research has revealed. In the survey of 410 executives, by the Economist Intelligence Unit, 30% felt trust was either very low or low, and they expected to see resignations when the economic recovery became more certain.
Full aricle here

Recession lessons: what has HR learned from the downturn?

With job cuts and management challenges in the news every day, the downturn has brought HR into the limelight as never before. We asked HR professionals across a range of sectors what they have learnt from this gruelling recession, how the downturn has affected the profession's standing, and what their priorities are for the year ahead.
Full Article here
Managers are currently leaving in greater numbers than last year and it is mor because of insecurity and restructuring according to the Chartered Management Institute as reported by the BBC.

Resignations among managers  'rise despite downturn'
People are prepared to resign without a job to go to, says the CMI More managers resigned from their jobs in the past year than in the previous 12 months, despite the economic downturn, research has suggested. The Chartered Management Institute (CMI) found 4.7% of individuals covered by its annual survey resigned, compared with 4.5% last year. Some 225,600 managers quit their jobs in the year to the end of January. The survey also suggests the average salary rise was 2.5% over the period, with large imbalances across the UK. With an average increase of 3.2%, managers in Scotland and the north east of England enjoyed the biggest pay rises during the downturn. Those in East Anglia, with an increase of 1.2%, received the smallest rises. Employee engagement CASE STUDY Paul Forster-Jones left a job managing 5,000 people to run a start-up with fewer than 10 "I had a million pound budget but the final straw was when it took six weeks to get a new desk signed off. I was a big fish but it can become a treadmill, with someone else working the speed control. Three weeks ago I started my new job with Clarity dtp, an internet business which enables drug manufacturers to supply direct to pharmacies. At the age of 52, I've spent most of my life in corporate organisations, and this is a chance to do something exciting." The CMI's National Management Salary Survey said junior managers got £21,876 a year on average, while "team leaders" received £43,119. The CMI said job insecurity and restructuring, rather than pay, were the main reasons why staff resigned. "The evidence is that during times of recession people get itchy feet. This is when they start looking at the job columns," Ruth Spellman, chief executive of the CMI, told BBC Radio 5 live. She warned that firms need to consider employee engagement. "You need a proper retention strategy," she said. "Most companies only think about it when people walk out of the door." Recruitment problems The CMI also said that its members were finding it hard to recruit staff, despite the latest figures showing that UK unemployment currently stands at 2.47 million. Filling vacancies is a problems for 46% of firms, with 77% saying they cannot get people with the skills they want. Recruitment industry body the Recruitment and Employment Confederation said that their members had also found recruitment was taking longer than it used to. They suggested this was because some people were less willing to move jobs, and that firms who hired fewer people tended to be more selective.

Your staff don't need an IQ of 120 to be the best performer. Find out here how their emotionala intelligence would give you more profit if you coached them.

Making changes often backfires and you do not get the results needed. Read here how you can avoid this and make change work.

It is usually the case that during change, not all the returns and rewards planned are achieved. We would like to suggest some of the common reasons why this happens and offer remedies to ensure you get the business improvement you want. Resistance to change is part of being human but our approaches of both conscious and sub conscious coaching enables change to succeed and the realisation of new possibilities. Read more

Disengaged_Employees_cost_UKPLC_Billions
Management Today July 17th 2009
The report, co-authored by specialists David Macleod and Nita Clarke, was commissioned by Lord Mandelson – the idea being to see whether better engagement could actually make the UK more competitive and help us recover from recession. And it cites various figures from employer groups and trade unions to demonstrate how low engagement levels currently are: a TUC/ YouGov survey last year suggested that only three in ten UK employees were actively engaged, while research from the Corporate Leadership Council suggested that only one in 25 fell into the highest engagement category. Even though the data’s quite old, it seems pretty clear that most companies’ efforts in this area still leave an awful lot to be desired.

Not surprisingly, the authors conclude that broader engagement would indeed improve performance. In fact, on the basis of the companies it’s been speaking to (like John Lewis, for example), it reckons the effect can be transformational – particularly for those people for whom ‘Monday morning is an especially low point of the week’ (ring any bells?). They make the entirely sensible point that at a time when goods and services are becoming increasingly standardised, people are the key differentiator. And it stands to reason that if staff really like their company, they’ll do a much better job of delivering their wares.

You’d think that none of this would be very radical. But in practice, it’s clearly not happening across the board. The review suggests that some employers are not even familiar with the concept of engagement, while others put no thought into how to make it happen, and others think that the odd employee survey will do the trick. To Macleod and Clarke, the logic of engagement is so compelling that this must amount to a failure of understanding – which is why their principal recommendation is for Mandelson’s Department for Business, Innovation and Skills to spearhead a national awareness campaign, in association with industry.

It’s a worthy cause. And asking your company to treat like you a human being, rather than as an economic unit, surely isn’t that much to ask in this day and age?
Winning in a recession
http://www.pressbox.co.uk/detailed/Business/Win_more_sales_from_your_web_site_296850.html

“In any recession there are winners and losers, businesses fail through lack of appropriate action, whatever it might be; fighting to reduce costs must go in parallel with battling to win more sales.” OsCar Systems help organisations find the course of action most likely to ensure that they come out on top, fitter and stronger to take advantage of the state of the economy, not fall victim of it. Each of the sections below can be a paper in its own right but this is great start to enable you to get a focus on what you should be doing to develop your successful strategy.

 

Graham Bailey has huge experience in finance, sales and marketing in companies ranging from the largest in the world to successful start ups built from nothing and being sold often in difficult economic climates. He is now applying the knowledge he has gained to help companies in the UK and Europe achieve strength and success. His simple mantra is “Use knowledge of your product, your customers and your business to make the right decisions and act on them now.”

 

1.                  Know your customers – you know your product or service; you may feel that it has universal appeal. Sadly or fortunately, this is rarely the case, as targeting the universe is more than a little problematic. What you require is a deal of soul searching to identify exactly who would derive the most benefit and WHY. Identifying the needs of your ideal customer is key to everything else you will do.

2.                  If you are an existing business, talk to your customers and revisit all your past ones, even if you upset them some time ago, go back to them now. People who know you represent the easiest route to derive more sales. Unless you have a once in a lifetime sale, there is always a need to keep talking to clients. Find out what they need; if they are completely happy and have no current requirements – get a referral and a testimonial. If you are a new business, talk to everyone you know, not to sell to them but to find out who they know who may appreciate the benefits that you established in step one. No takers? Think again about the viability of your business idea.

3.                  Do you have a web site? New company or established business, the table below shows where activity should be focused.

Web site hits  Low ----------High	Poor representation of your benefits or call to action.	Improve web site for conversion tactics	Got it right – relax and focus on something else now.
	Visitors not always seeing the benefits you offer.	Improve Links and PR	Improve Links and PR, web site conversion OK.
	Lots of work to do but maximum potential for improvement.	Focus on Links, Keywords and PR activity to get more hits.	A reputable web site or your business does not come from the web. More hits could mean more business still.
Quantity of Sales	Low	Medium	High

 

4.                  If the chart above shows that you need to do more work on your web site then following the process here should improve matters. First of all, if you don’t yet have a web site, find your keywords first and build those into the body, titles and page URLs of your design. If your web site exists already then you should try to achieve that by some re-design. Key words are KEY and will ultimately get you found on Google and Yahoo. An excellent resource for doing this is https://adwords.google.co.uk/select/KeywordToolExternal it is important to choose short phrases rather than single words because if you start to use Pay per Click, you will find them expensive as other people will be bidding against you. Think about what you sell and what people might use to try to find this.

5.                  The next vital stage is to get links to your web site, preferably from other web sites that have a relationship with your subject. If you know people with such web sites, now is the time to pick up the phone and ask for a link. Choose the words that they will highlight with a link carefully, do not use “Click here”, you will get little benefit but if you are a photographer, you could for example choose – “wedding pictures to remember forever” for better effect.

6.    Social bookmarking is now an essential, so get onto Facebook - http://www.facebook.com, make a video and put it onto Youtube - http://www.youtube.com/ also Tweet on Twitter 140 characters at a time - http://www.twitter.com/oscarpbx also you can learn from the Social Median Portal http://www.socialmediaportal.com/ and as many more as you have time for. Aim for getting at least six social network links to your site.

7.             Finally, you need to write some articles and get them published on the web. You can do this yourself at http://www.prnewswire.co.uk/ or use a professional, we can advise on suitable candidates for you who can help get your news out there. Sales is the result of a funnel, leads in the wide top end and sales from the narrow bottom end. Seek to put as much in the top as you possibly can.

 

To get in touch about improving your sales performance we can be contacted at www.oscar-pbx.com/sales.html and we will be pleased to chat through what can be done.

 

 

 

 

 

Redundancies; Adopt the healthy choice to help harness talent.

 

Having analysed the scenario from every angle and now found that redundancies are the only way to keep the business moving forward. Here are six tips on outplacement, fulfilling the healthy alternative but with the added benefit of discovering new talent in your own back yard.

 

Always go the extra mile.

As an HR professional you know the law and the minimum requirements for compliance, however, you should look beyond this.  Now is the time to have accurate, open and honest communications with your work force.  Don’t ask employees to live with the fear of redundancy; if you know what’s happening – tell them.  Remember that these are real people with real lives who will be frightened and possibly angry.  Put your business case forward, if it makes sense to the business, it will make sense to your workers.  Make sure the line managers delivering the news have been coached.  It is vital that they should be sympathetic and clear; if this process is handled in a clumsy manner it damages both the employee and the company.

 

Check that the HR department have current experience of handling redundancy and change.

If not, then get help now. A professional can train your people and it will pay dividends in future productivity.  Now is the time to roll your sleeves up and get involved to benefit those ‘at risk’, i.e. those singled out for a decision whether they stay or have to go.  Beware the disaffected employees and those wanting to cash in on potential turmoil – nip it in the bud by knowing the law and move on – do not ask line managers to handle these people; this is where your professionalism counts most in saving the future of the business.

 

Do you have good measurable Outplacement service in place? 

Your chosen Outplacement Provider should be on site when the announcement is made.  When the news is delivered it will soften the blow if an independent professional is waiting in the wings and your people know that help is available.  If this process is handled well it will reassure those not affected by knowing that the company cares about all employees.  This is crucial to your employee retention and enables the company to be in a leaner and healthier state to face the future and avoid a repetition of the process later. There are free Outplacement services available but be sure that you don’t mistake “free” for worthwhile, we all know the adage about a free lunch.

 

Remember that you have already invested time and money on recruitment and training.

Galvanise those left behind to really get behind the company.  If you have a number of people applying for remaining positions give them the same help you have provided to the redundant employees.  A good outplacement company will have specialist coaches for just this sort of scenario and will enable you to select the best candidates to motivate and establish loyalty.

 

Harness the talent in the building.

Share as many objectives and long term plans of the organisation after the restructuring that you can; you will be pleasantly surprised who comes out of the shadows with good ideas and untapped talent. HR should adjust their strategy if past focus has been on recruiting; now it is all about talent spotting, development and retention. Think rewards and benefits and you will get high performance and fulfilment.

 

Focus on the real business needs because this is an opportunity for HR to shine. 

Over the last few years HR and not a moment too soon, has got its feet under the table.  Enlightened organisations have allowed their HR departments to have a real strategic role – now is the time for HR to follow through and add real weight to the board room.  This might involve bringing long term plans forward and being willing to adapt and work hand in glove with those departments once seen as ‘the enemy’ like finance.  After all you all want the same result; a well motivated and happy workforce. 

 

Helping businesses with unique Outplacement and Staff Development Coaching, OsCar Systmes can be contacted via http://www.oscar-pbx.com/contact.html or by phone at 020 7043 1636.