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Welcome to Buzzing About HR, the weekly podcast from Kate Underwell at HR & Training. Join us as we explore everything HR, from practical advice to the latest trends, helping you make sense of the world of work. Hello and welcome to today's episode of Buzzing About HR, Trends, Tools and Tactics. I'm your host Kate Underwood and today we're going to tackle a topic that can feel a little bit like a punch to the gut for many business owners and HR leaders, redundancies. Now I know when you hear the word redundancy it brings up a whole load of emotions. There's that immediate sense of dread, the difficult conversations the legal complexities and of course the impact on your team. Whether you're facing redundancy due to financial pressures, restructuring or changes in business direction, it's not an easy decision to make. But here's the good news. Redundancies don't have to be a disaster. In fact, if handled well, they can actually set your business up for future success. It's all about how you approach it. With the right planning, communication and a compassionate approach, you can navigate redundancies in a way that's compliant, empathetic and keeps morale high, even during difficult times. Today, we're going to break down the redundancy process into four key parts. By the end of this episode, you'll have a clear roadmap for managing redundancies step by step. So let's dive in.

Introduction

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Let's begin with the planning stage. And this is where the foundation is really built. Before you even begin to think about sitting down with employees to talk about redundancies, you need to take a step back and really assess the situation. What's driving this decision? And what's the bigger picture here? First things first, you've got to ask yourself why redundancies are on the table. Is it because business isn't doing as well as expected? Or are you going through a period of restructuring? Or maybe you're adopting new technology that makes certain roles redundant. The reason why is crucial, because if you don't have a clear understanding of what's driving the redundancy, it's going to be difficult to explain to your employees. Once you know the why, it's time to think about alternative solutions. And let me tell you, redundancies should never be the first thing you consider. there are often other ways to manage difficult situations. Could you reduce working hours or freeze recruitment or offer voluntary redundancy before making a decision? Are there opportunities for redeployment within the company? These options might not save everything, but they could be a great way to reduce the number of redundancies you need to make. One practical piece of advice here, check your contracts of employment. Many businesses overlook clauses like layoff or short time working. If your contracts include these, you could have a tool that could save you from making redundancies in the first place. I remember during the early days of COVID-19 in 2020, businesses that had these clauses in place were able to use them temporarily to reduce working hours or lay people off without the need for full redundancies. And let me tell you, this really helped some businesses weather the storm. Employees were often more happy to accept a temporary reduction in hours rather than face losing their jobs altogether. It gave them some financial security. while giving the businesses the flexibility it needed to avoid mass layoffs. This is something I've seen work well in the past, and it could be a lifeline for you too if your business is facing difficult times. If your contracts don't currently have these clauses, it's something worth thinking about for the future. For now, make sure you're aware of any layoff or short-time working clauses you already have and see if they can be used as a temporary solution before considering redundancy. It's also important to evaluate the financial implications of making redundancies. What's the cost of redundancy pay? What impact will that have on cash flow? And how will it affect your ongoing operations? You need to have a solid understanding of the numbers, both short-term and long-term, before moving forward. If your business can't afford the redundancy packages, or if it will create a bigger financial Another key step at this stage is assessing your legal obligations. This is a step you absolutely cannot skip. You need to be familiar with all the laws and regulations that govern redundancies. This includes statutory redundancy payments, notice periods, consultation requirements and how you select individuals for redundancy. If you don't get this part right, it can open up a whole can of worms in terms of legal challenges. So make sure you're well informed. If you're not up to speed, I recommend consulting an expert who can guide you through the legal complexities. Someone like me. Now that you've assessed the need, considered alternatives and gotten your head around the numbers and legal requirements, you're in a much stronger position to start the actual redundancy process when the time comes. But don't rush it. Take your time and make sure you've considered every angle before proceeding.

Part 1: The Planning Stage - What do you need to do before even thinking about redundancy

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Okay, you've done the planning and now it's time to get real with the employees. This is where you need to build your business case. You can't just walk in and say, hey, we're making some redundancies because, well, things aren't going so well. That's not going to cut it. You need to have a clear, factual explanation for why redundants are necessary. Data is your friend here. Pull together all the relevant financial reports, performance data, data and evidence of changes in the market or business. You need to be able to show, not just tell, why this decision is necessary. If you've explored other options like reducing hours or redeployment, make sure you explain why these options weren't feasible. And here's the thing, transparency is key. You don't have to give every single detail, but you do need to be honest and open about the reason for redundancies This helps to build trust with your team. If you're dealing with financial struggles, say it. If it's a business restructure, be clear about that. Employees can handle the truth. And in fact, they'll appreciate your honesty. It's when people feel that they're being kept in the dark that trust breaks down. Now, once you've got your business case ready, you'll need to think about how to share the news. This is where things get a little tricky. First, make sure you communicate with empathy. Redundancy isn't just a business decision. It's a deeply personal matter for your employees. So handle it with care. Whether you're talking to individuals or holding a group meeting, approach the conversation with respect. Avoid any corporate jargon and keep it human. I also strongly recommend implementing a consultation period. Not only is this a legal requirement in many cases, but it's also a great way to show that you value your employees opinions. During this period, allow employees to ask questions, raise concerns and even propose alternatives. This helps them feel involved in the process, which can make the experience a little less painful. So here's just a little summary of what your business case should look like. You should have an introduction and company background. It's really important to provide some context about your organisation, and here's what it should include. A description of your organisation, where your company locations are, total number of employees, whether it's a unionised environment or not, any sister or associated companies, and if you've had any recent redundancies. Now it's time to be clear about why redundancy is being considered. Here are some points to address. Why the organisation is considering the redundancies, whether it's due to financial struggles, restructuring or changes in customer needs, outline the specific reasons that have led to this decision. Financial struggles or operational changes. Provide a bit more insight into the internal or external pressures your business is facing, such as a downturn in revenue, a shift in business priorities, or changing market conditions. Here's where you can show the data that backs up your case. So for example, your management accounts or financial data. Provide any key details like profit and loss statements that illustrate the current financial status. Sales or revenue data. If applicable, show how revenue or sales have impacted and how this affects staffing levels. Job descriptions. Outline existing roles and any new roles that may be created as part of restructuring or refocusing efforts. The current and the proposed organisational chart. This is really a key one. It shows how the business is structured and how it will look post redundancy. And then any other relevant data. You might want to include information on customer loss, reduction in demand or client feedback. The next section is proposals. So this is where you provide specific details about the redundancies. So this would be the number of employees affected. So you need to list the roles, job titles and locations of the positions at risk. Any other changes to roles, so if redundancies are leading to restructuring, be clear about how roles may evolve. So, for example, the current team in the XYZ department comprises of six full-time employees, including a manager and five team members. It's proposed to reduce this team by two, resulting in three full-time employees and one part-time employee. Some of the managerial duties, such as HR tasks will now be carried out by the finance manager. That is clear, simple and to the point. Supporting information. So provide an employee chart to identify all posts that are affected by the redundancies. This gives clarity and transparency to the process. You then need to look at the measures to avoid redundancy. Before jumping straight to redundancy, outline what you've done to avoid it. So things such as freezing recruitment. Have you paused hiring to cut costs? Reducing overtime. Were staff asked to limit overtime to help reduce costs? Other cost-saving measures. List any other initiatives you've put in place, such as limiting bonuses, reducing operating hours, or cutting discretionary spending. Increased charges. Did you increase prices to maintain profitability? Use of agency staff. If you stop using agency workers, make that clear. Additionally, explain why alternatives to redundancy weren't sufficient or couldn't be maintained long time. The next part is timeline and process. So now you've outlined the reasoning and proposals, it's time to present the timeline for the process. Here's what to include. Who will manage the redundancy process? Give detail on who will be responsible for overseeing the redundancy and communication process. Explain who will conduct the consultation meetings. This is usually HR or senior management, but clarify who will be involved. And the appeal process. If required, mention who will handle any appeals or grievances raised during the redundancy process. And finally, the proposed timeline. Outline the key milestones of the redundancy process, from the consultation phase to the final decision making stage. There you go. By including all of this in your business case, you'll be transparent, clear and fair with your employees. A well thought out and structured redundancy proposal not only helps mitigate the emotional impact on employees, but also ensures you can demonstrate that the decision is well grounded and justifiable. It sets the tone for the entire redundancy process and makes it smoother for everyone involved.

Part 2: Building your business care - How to Share the news with Employees

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Now let's talk about the actual redundancy process. After all the planning and communication, this is where it all happens. And I'm going to be very honest with you here. This is the hardest part of the entire process. It's tough on both you as a leader and your team. The first step, clear communication. When you're informing someone that their role is at risk of being made redundant, it's crucial to do so with compassion. Schedule a private meeting, whether in person or virtually, where you can have an open and honest discussion. Don't try to sugarcoat it or give false hope, but also make sure you're empathetic. Acknowledge that it's a difficult time and offer the support they need moving forward. Be transparent about the whole process and how it will unfold. It's essential that the employee understand what the next steps are, what support will be given and how the process will proceed. If you're personally close to the affected employee or if you're managing the redundancy of someone within your team, you may want to consider starting the process and then handing over the remaining steps to someone like an HR consultant or a neutral third party. This ensures that the employee is treated with respect and care and it also allows you to continue focusing on supporting the team that remain. One of the most crucial things you need to do is make sure employees don't feel like they've done something wrong. It's easy for those affected by redundancy to internalise the situation and think that they're at fault. They will often believe they've done something wrong, but it's important to repeat that it's not them, it's the role that's at risk of redundancy. The more you reinforce that, the less likely it is that they'll feel guilty or blamed. I cannot stress enough how important it is to treat employees with compassion. This is a difficult time for them and even though they may not show it immediately, your empathy will be appreciated later. You don't need to spend a fortune on support services, but having a robust support and welfare proposal is vital. This can include things like offering emotional support, career counselling, or even connecting them with job search assistance. It doesn't have to cost a lot, but employers will be grateful for any support you provide, even if they don't show it right away. Make sure you communicate the reasoning behind the decision. Why was this role so selected? Was it based on business need or was it performance related? Whatever the case, it's important that the process is seen as fair and non-discriminatory. If you can be transparent about the selection criteria and explain how the decision was made, the more clarity you provide at this stage, the easier it will be for the employee to understand that the decision was based on the role, not on their performance or personal qualities. It's also incredibly important to stay on top of compliance at this stage. You must follow the correct notice periods and provide redundancy pay as required by law. Keeping thorough records of all communications and meetings with the affected employees is essential to ensuring you're legally protected throughout the process. But don't forget about support. Redundancy can be devastating for employees, and it's important to offer outplacement support or career counselling. This support will help them plan their next steps, whether it's finding a new job, retraining, or even just having someone to talk to. It not only helps ease the emotional burden of redundancy, but it also shows your team that you care about their wellbeing and success beyond their time with the company. Remember, redundancy isn't just about ending a role, it's about managing the transition in a way that respects the dignity of the employee. Show them that you're committed to supporting them throughout this process, even though it's a tough situation. They'll walk away knowing you took care of them.

Part 3: The Redundancy Process - Communication, Support and Compliance

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Once the redundancies are done, there's one more group of people who need your attention. Those who remain. And trust me, just because they didn't lose their jobs doesn't mean they're not impacted by the redundancy process. Your remaining employees will likely be feeling a mix of emotions, relief, guilt and uncertainty about their own job security. This is a crucial time to maintain morale and reassure your team. Reassure them about their roles. Let them know that their jobs are secure. if that's the case, and remind them of the company's long-term vision and goals. This can help them understand that the company is rebuilding and moving forward, and they have an important role to play in that process. Survivor syndrome is something you absolutely need to be aware of at this stage. When redundancies happen, those who remain in their roles may feel a sense of guilt or even anxiety. This is often called survivor syndrome. The individuals who have stayed may question why they weren't chosen for redundancy or feel guilty about their colleagues that were let go. They may also feel anxious about the stability of their own role, wondering if they'll be the next one to go. It's important to acknowledge these feelings and make space for conversations around them. People with survivor syndrome often experience a conflict of emotions. They might feel relief but it's quickly followed by a sense of guilt. This can create disengagement, stress or even a decline in morale. If these feelings aren't addressed they can have a ripple effect on the rest of the team leading to a decline in productivity and overall job satisfaction. So, how can you address survivor syndrome? First and foremost, validate their feelings. Acknowledge that it's completely normal to feel guilty, anxious or uncertain in the aftermath of redundancies. Let your employees know that their feelings are heard and understood. Empathy is key here. Let them know that you appreciate how hard the situation has been for everyone, including them. You need to reinforce the message that the redundancy was about the role and not about the individual. Many employees who remain after a redundancy feel like that they were chosen simply because they weren't bad enough to be made redundant. They might start questioning their own value and this can lead to disengagement. So it's really important to regularly reassure them that the decision was not personal. It was about the needs of the business, not their performance or worth as individuals. This needs to be communicated consistently. You may need to repeat this message several times, particularly in one-to-one meetings, so it starts to sink in. It's also important to address any anxieties about future redundancies. If people are worried that they might be next, don't just brush those concerns aside. Acknowledge their fear If there's a chance that future redundancies might occur, be transparent about that, but also reassure them that the business is now in a better position to grow. Tell them the measures being put in place to prevent further layoffs, whether that's through diversifying services, entering new markets or streamlining operations. If you can, outline a timeline for the company's recovery and grow so employees know what to expect. But if the future is still uncertain, be honest about that too. Don't pretend to have all the answers. However, do reassure them that the business will continue to communicate openly as things evolve. Transparency during uncertain times is crucial. It builds trust and helps alleviate the fear of the unknown. Engaging your remaining employees is absolutely crucial in rebuilding morale. Engagement isn't just about being open during tough times. It's about showing them that they're an integral part of the company's recovery. After redundancies, it's natural for employees to feel that their roles are now even more important. But it's also possible that they'll feel demotivated, unsure about their own place in the company's future. To address this, it's important to recognise their contributions. Take the time to thank them for their loyalty, their commitment and their work that they've put in during a difficult period. Provide opportunities for growth. Employees who remain after redundancies may feel stuck or uncertain about their future. Offering training or development opportunities can give them a sense of purpose and empowerment. It also helps them feel more equipped to take on new responsibilities or evolve within the company. This is a great time to revisit your team's career development plans and offer new growth opportunities. Encourage employees to speak up about their concerns, ideas or suggestions for the future. Having a voice in the future direction of the company can go a long way in making employees feel valued and heard. Create open spaces for these discussions, whether it's through town hall meetings, one-to-one checkings or just informal catch-ups. The key here is to rebuild trust. After redundancies, trust can take a hit, especially if the process was difficult or if employees feel their jobs were uncertain. Rebuilding trust takes time, but it can start with small, consistent actions that show your employees you care. Check in with them regularly, celebrate milestones and provide ongoing feedback. When employees feel their contributions are valued, their morale will naturally improve. It's also important to recognise that trust isn't built overnight, especially after redundancies. It requires ongoing effort. But when you continue to show up with honesty, empathy and commitment, your employees will feel supported. They'll be more likely to trust the company's future and they'll also be more willing to invest their energy and time into helping the company recover. Finally, celebrate the wins. Big and small. Every victory, every milestone, no matter how minor it might seem, should be acknowledged. This helps your team feel like they're part of something bigger and reinforces the message that the company is moving forward and growing even after a difficult period. Celebrate these wins together, bringing the team closer and helping rebuild a sense of unity.

Part 4: The Ongoing Message to those who stay - Maintaining Morale

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Now let's dive into some of the common mistakes small businesses make when going through the redundancy process and trust me some of these are easy to make if you're not paying attention. First there's the lack of clear communication. This is huge. A lot of businesses make the mistake of not communicating properly about why redundancies are happening. Sometimes they just say sorry we've got to make cuts. That's not enough. Employees will One example that comes to mind is a small retail business during the pandemic. They needed to make redundancies due to a declining foot traffic, but they just told staff we're having to make cuts without offering any explanation about why certain roles were being selected. Can you imagine the confusion and resentment amongst the team? People want to understand the reason behind the decision. Whether it's a financial strain, a shift in business direction or something else, transparency is key here. Next up, failing to follow the legal process and consultation requirements. It's so easy to skip a step when you're busy running a small business, but trust me, you don't want to mess this up. A small IT company, for example, tried to lay off one of their employees, but completely skipped the mandatory consultation period. They didn't even offer a chance for the employee to discuss the redundancy or suggest alternatives. The employee took them to court and guess what? They won because the company hadn't followed the legal process. The takeaway here, if you've got 20 or more employees, you need to give a minimum of 30 days for consultation. For larger businesses, that increases to 45 days. If you've got less than 20 employees, depending on how many employees you're looking to make redundant, I'd suggest either a one or two week consultation process. Then there's the issue of not offering enough support to effective employees. Redundancy is tough on employees and if you don't provide any support it can really backfire. One family-owned business went through a difficult financial year and had to make several redundancies. While they followed the legal process they didn't offer any outplacement services, career guidance or emotional support. The employees who were let go felt abandoned and the remaining staff started to feel uncomfortable and demoralised too. Offering support services doesn't have to be expensive Even a few hours of career counselling or job search assistance can go a long way to help employees transition smoothly. Another big mistake is incorrectly applying a selection criteria. You can't just pick employees for redundancy based on gut feelings or outdated performance reviews. It needs to be fair, transparent and objective. One example is a marketing agency that made a redundancy decision based on performance reviews for several years ago. But here's the problem. Those reviews were outdated and the employee in question had been performing well recently. The redundancy was challenged and the business was found guilty of using unfair criteria. The lesson here is simple. Make sure you're using current objective criteria, things like skills and attendance and length of service and avoid relying on subjective or old performance reviews. Finally, after the redundancy process not supporting the remaining employees can be a big mistake. Those who stay behind can experience feelings of guilt or anxiety sometimes referred to as survivor syndrome as we've already talked about. This can lead to disengagement, a decline in productivity and even more turnover. For example, For example, a small hospitality business made some redundancies due to financial pressures that didn't make any effort to reassure the remaining staff. Those left behind became anxious about their roles and worried about whether they might be next. To make things worse, they were asked to take on more responsibilities without any additional compensation, which led to burnout. You need to reassure your remaining team, give them opportunities for growth and show them that their contributions matter. So here's a are the five biggest errors small businesses can make during redundancies in the UK. Lack of clear communication, not explaining the reasons behind redundancies properly. Two, failing to follow the legal process, skipping or mishandling consultation periods and notice requirements. Three, not offering adequate support, failing to provide emotional or career support to employees affected by redundancies. by redundancy. Four, incorrect selection criteria, using unfair or discriminatory criteria to choose which employees will be made redundant. And five, not supporting the remaining employees, neglecting the morale and welfare of employees who stay after the redundancies are made. By avoiding these mistakes, you can manage redundancies in a way that's not only compliant, but also supportive and respectful of all your employees. employees involved.

Part 5: The Top 5 Mistakes Small Businesses Make during Redundancies

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Let's take a moment to talk about the potential costs of not following the correct redundancy process. It might seem a lot of paperwork and are complicated rules at first, but skipping those steps can cost your business a lot more than you might think. And when we're talking about costs, I'm not just referring to the numbers on the balance sheet. There are some real hidden consequences too. First up, unfair dismissal claims. If you don't follow the right steps when making redundancies, Employees who feel that they were unfairly let go can file a claim with an employment tribunal. The maximum compensatory award for unfair dismissal has shot up to £105,707 as of April 2023. Now imagine this, you make an employer redundant without properly consulting them or following fair selection criteria. The tribunal could award the employer payout that's either one year's salary or the statutory limit, whichever is lower. So if that employee's salary is £50,000, you could be on the hook for the full 50k. Next up, let's talk about the legal costs. Defending a redundancy claim can lead to some pretty steep legal bills, even though employment tribunal fields were abolished back in 2017. You'll still need to cover the costs of legal representation and any compensation payments that might be ordered if the tribunal finds in the employee's favour. For example, you might end up paying both the basic award and the compensation reward, which could seriously impact your business's bottom line. Now we can't forget about reputational damage. Word spreads fast and if your redundancy process is messy or mishandled, it's not just the employees involved who notice. Your customers, future job candidates and even potential investors might start questioning your business practices. Think about it. Would you want to work with a company that's notorious for treating people unfairly? Probably not. If your redundancy process leads to bad publicity it could hurt your ability to attract customers or top talent in the future. It can even hit sales and productivity. After all if your employees aren't feeling great about the company they're not exactly going to be firing on all cylinders. Then we have the financial losses. If you don't give employees the proper notice or redundancy pay they might seek compensation for loss of earnings or even emotional distress. Imagine this, you don't follow the right notice period and employee claims for notice pay on top of their redundancy payment. In cases of wrongful redundancy, this can quickly add up and suddenly that quick redundancy decision doesn't seem so cost effective anymore. Let's not forget about additional redundancy costs. If you fail to follow the correct process you might end up paying more in redundancy payments than you initially expected. For example if an employee has been with you for 10 years and their weekly wage is £700 they could be entitled to £7,000 in redundancy pay. This could all add up quickly especially if you've made multiple redundancies and missed a few legal steps along the way. And just to keep things clear, as of April 2024, the maximum statutory redundancy payment is capped at £21,000. This will go up as of April 2025. Finally, let's talk about the long-term impact on employee morale and retention. The reality is, redundancy decisions don't just affect the people who are let go. They affect everyone else who remains too. Employees who feel that the process was handled unfairly or without enough transparency, might become disillusioned. They might even start looking for other opportunities, which means you're left with a higher turnover rates and the cost of recruitment and retraining new staff. Not to mention, if employees aren't motivated or engaged after redundancies, that this can hit productivity levels too.

Part 6: The Potential Costs of not following the Correct Process

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By now, you should have a solid game plan for managing redundancies. Let's quickly recap the key points to help guide you through the process Number one, planning. Take the time to understand the reasons for redundancies. Explore alternatives and assess the financial and legal impact. Get familiar with the legal side, including statutory payments and consultation periods. And don't forget to check your contracts for any clauses that could help you avoid redundancies. Number two, communication. When sharing the news, be transparent and empathetic. Create a clear business case to explain the need for redundancies and implement a consultation period to give your employees a chance to be involved in the process. Three, redundancy process. During the process, maintain clear and compassionate communication. Ensure the redundancy process is fair, transparent and legally compliant. Support the effective employees as they transition out of the company. And four, maintaining morale. After the redundancies are made, focus on the employees who remain. Acknowledge any feelings of survivor syndrome, be honest about the future and keep your team engaged by offering opportunities for growth. Rebuild trust and morale through consistent support and recognition. With these steps in place, you'll be able to manage redundancies in a way that is not only compliant, but also supportive and empathetic. It's all about making sure the process is fair for everyone, from those who are leaving to those who are staying. I hope that gives you some solid tips for handling redundancies effectively. It's not easy, but if you approach it with empathy, transparency and a solid plan, you'll navigate it just fine. And remember, redundancy doesn't have to be the end. It can be a necessary step to help your business recover and grow. And that brings us to the end of today's episode of Buzzing About HR Trends, Tools and Tactics. I hope you've found some valuable insights into managing redundancies with both care and compliance. It's never an easy topic but with the right approach you can navigate these challenges while keeping your business on track and your team supported. If you're facing redundancy decisions or just want some more advice on people management feel free to get in touch. I'm always here to chat and remember whether you're an HR leader or a business owner you don't have to go through this alone there are Always ways to make the process smoother and dare I say it, a little bit easier on everyone involved. Don't forget to subscribe to Buzzing About HR so you never miss an episode. If you enjoyed today's show, please leave a review or share it with someone who might find it helpful. But let's face it, we could all use a little more HR wisdom in our lives. Until next time, keep buzzing and stay positive because with the right people and the right mindset, you can overcome anything that comes your way thanks for listening and take care

Part 7: Summary

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thanks for tuning in to buzzing about hr we'll see you next week for more insights and tips to support you and your team