To say that we are living in troubled economic times is rather like saying the sky is (sometimes) blue – everyone knows it and it is also obvious to all.  But what does this mean for your business and its employees?  Some businesses will need to re-organise while others will need to downsize.  Such changes will inevitably have an impact on employees and so must be handled carefully and correctly by the employer.

If you cast your minds back to 1997, when Tony Blair became Prime Minister, you may recall that his mantra was, “Education, education, education.”  For employers who are thinking about restructuring or downsizing, their mantra should be, “consultation, consultation, consultation.”  Whatever the ultimate outcome, employers must follow a full and fair procedure, an important part of which will be employee consultation.

If a business is considering making redundancies then it will need to ensure that the correct procedure is used in order to avoid potentially costly and time consuming claims in an Employment Tribunal.  To start with, an announcement should be made, warning the employees of the possibility of redundancies.  Volunteers can be requested at this stage, although a prudent employer will always reserve the right to refuse volunteers for their own reasons.  If compulsory redundancies cannot be avoided, then the employer will need to decide how many employees are at risk of redundancy and which roles are to cease.  Once this has been decided, this information should be communicated to the employees.

The next step in the process will be a selection exercise.  This will result in the employer confirming the employees whose selection for redundancy is confirmed.  In some cases this will be straightforward, for example if there is only one person carrying out a particular role and the business no longer needs that role in the future.  That employee is therefore in a unique role and will not have to be compared with other employees.  However, often an employer will simply want to reduce the number of employees carrying out a role.  In this case, a full selection exercise will be required including all the employees who do the same, or similar, work.  The employees will have to be scored against agreed criteria, which should be as objective as possible.  Furthermore, the criteria should not be discriminatory in any way.  Once the scoring exercise is complete, the employees with the lowest scores will be informed that their selection has been confirmed.  The employer will then consult individually with them.

The individual consultation process will include a series of meetings between the employer and the employee.  The initial focus will examine ways in which that employee’s dismissal can be avoided.  The principal way of achieving this will be if alternative employment is available.  If this is not possible, then the employee will want to know what payments will be received.  Finally, the employer will have to confirm the dismissal in writing, informing the employee that they have the right to appeal against the decision.

Whether restructuring or making redundancies, the correct procedure is relatively easy for employers to follow.  However, it is just as easy to get it wrong.  At the moment, employers must also incorporate the statutory dismissal procedure into their best practice procedures where appropriate.  Employers should therefore always proceed with caution.  Getting it wrong can be expensive and can mean that the expected and required savings to the business are not as great as they might otherwise have been.