Although things may be going great for your business right now, there’s always the potential for storm clouds on the horizon. If the economy or something just as unpredictable throws your cash flow up in the air, then you may have to make some heart-breaking changes. One of the most common is redundancies. No business owner likes having to let people go, when it has to happen it has to happen. Here are a few mistakes you need to be aware of when making redundancies.
First and foremost, using unfair selection criteria. When any employer is setting out selection criteria for a redundancy, they need to make sure that it stays both clear and objective. Yes, a redundancy can be based on a subjective opinion of you or one of your higher-ups. However, this needs to be backed up by hard, objective evidence. Length of service, attendance, and the employee’s disciplinary record are all common factors. However, you’ll almost always want to take performance into account. This needs to be cross-referenced across documents such as financial data and appraisals. You’ll get a lot of discretion in this area, but if you use unfair selection criteria, the consequences can be massive. Make sure you’re aware of the big no-no’s, and seeking the relevant employment law consultancy and advice.
Another big mistake you need to avoid is applying your criteria in a way that could constitute discrimination. Yes, the criteria needs to be fair, but the application of it needs to be too. If you mess this up, you could be facing a damaging unfair dismissal claim. For example, if you’re scoring employees based on their attendance, you need to discount any absence that was related to pregnancy, and consider adjusting any scores which were based on absence out of a disability. Judging employees based on their length of service has also been linked to age discrimination at times. This isn’t to say you can’t use this criterion; you just need to make sure there’s a legitimate business objective behind it.
Finally, neglecting to consider voluntary redundancy. As a business owner, you’re not obliged to invite people for voluntary redundancy. However, doing this can occasionally protect you from unfair dismissal claims. This is because it shows that you’ve made an effort to try to avoid compulsory redundancy. Aside from matters between you and the employee, a voluntary redundancy going through can save you a considerable amount of time. This can be very important in situations where you’re having to let people go. You might be fighting against the current right now. However, if you accept the inevitability of redundancy early on, you can save a lot of the time it takes to work out and apply various selection criteria and hold the necessary appeals. Also, when an employee accepts voluntary redundancy, it’s obviously highly unlikely that they’ll claim unfair dismissal.
Though it can’t solve all of your HR problems, I hope this information has made it a little easier to get through such a difficult time.
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