Making Tough Redundancy Decisions

In today’s working life as an employee, people will have an average of 10 jobs in their lifetime. Therefore, working in HR is not always pink and fluffy. Unfortunately, sometimes, you have to be confident and ruthless enough to help a CEO or MD make those tough decisions.  Terminating a contract due to redundancy is definitely one of those times.

My Recent Experience With Employee Redundancy

I recently had to deal with one of those tough redundancy decisions and make the dreaded phone call. The business was not performing as well as I had hoped and, I need to downsize the team.

As a small business owner, taking on an employee is an incredible responsibility. We have all seen those pictures on Twitter or Facebook saying ‘By supporting small businesses, you are paying for ballet lessons, not a new company jet’. What they don’t say is that small businesses first need to pay the wages of employees so that they can later pay for the ballet lessons and electric bill.

Although this is a difficult subject to talk about, I felt it was necessary to write about it and make sure that you don’t put your head in the sand.

Be Prepared To Make Difficult Redundancy Decisions

In most employment contracts, there is a  “Layoff and Short-Time Working” clause. I often find myself having to explain this to employers and employees. The Layoff and Short-Time Working clause means that should the work reduce for a temporary period, for example, if there is a reduction in sales such as a recession.

Instead of offering redundancy to all three members of your full-time staff, consider reducing their hours for a set period. Doing so would enable them to keep a job with reduced pay, but keep some money coming in. When sales do pick up, your employees are ready to come back to work with more hours. There are, however, some rules you need to be aware of, and employees may even be eligible to guaranteed statutory payments from the government.

You must also be careful with notice periods as a small business. Long notice periods are great for ensuring you don’t get left short-handed but can prove to be costly.

Be Realistic

Running a small business takes much hard work and keeping up with all the obligations of finances, operations and people is challenging.

Make sure that you have an understanding of your finances and if you think that the sales are just not coming in, be ready with a plan B.

The Golden Rule

What does Plan B look like? I always say to employers that they should treat their employees as they would want to be treated themselves. Often referred to as The Golden Rule, this is an excellent rule for life in general!

If it looks like redundancy is on the cards; if you know that you don’t have enough money to pay your employees in one month’s time – don’t wait! Give notice of what is happening, allow them to offer ideas on how things could be improved. At the very least, give them the chance to organise their finances and look for other opportunities.

Get Support

Make sure you get some advice and support. I know most business owners making these types of decisions want to do it themselves, and understand their reasons. However, decisions surrounding redundancy are tough and making sure you get it right is the most important thing.

If you have employees on Maternity or Long Term sick leave, it is essential that they are advised and consulted in the same way as other employees.

If you need help, support or advice surrounding making difficult redundancy decisions, I can help. Please get in touch to make an appointment.