Redundancy strategy – Questions and answers

Crossley, principal consultant at RMW International, answers our questions on
redundancy strategies

Is it necessary to have a formal redundancy policy?

An ad hoc approach is perfectly legal and is common with small companies.  However, it is prudent to consider
establishing a formal policy and procedure on redundancy for a number of
reasons. Two in particular are:

In the event of possible redundancies employees know their welfare is
considered and know what to expect

As the policy and procedure should have received the approval of the trade
union(s) or staff representatives prior to its adoption, it will normally lead
to a smoother and swifter implementation, which is desirable on all fronts 

What should be included in a policy, and should this be part of the contract?

A redundancy policy would normally include the following:

Maintenance of job security


Action to avoid/minimise compulsory redundancies

Transfers and redeployment

Selection criteria

Severance terms

Relocation and hardship assistance

Support for those affected to obtain alternative work or training

is neither necessary nor advisable for the redundancy policy to be part of the
contract, but it is appropriate for your redundancy procedure to be included in
the employee handbook if one is provided.

What are the most important factors in selecting an outplacement service?

This depends on your requirements, but my top five suggestions are:

Flexibility in providing a service appropriate to your situation and budget –
if the budget is very tight, try asking the company what they can provide
within that figure, rather than simply asking for a quote 

People are nearly always surprised by just how much is involved in
outplacement, so make sure the company provide a good reference manual for all

Capable and empathetic consultants are fundamental to a successful
programme.  Question how they select
their consultants and keep up to speed with developments in recruitment practice
and procedure. Ask whether they provide current and pertinent market
information and if so, what? Also ask how they will assist your people to
access the unadvertised job market

A follow-on support service that puts people in touch with appropriate
consultants/experts, not just a call-centre style help-line

Confidence that the service provision will live up to expectations, with
avenues for redress if it does not

If we provide outplacement, how can we ensure that the consultants do a good job?

It is wise to agree on quality performance standards with the outplacement
consultancy you select.  Also ask about
how the company monitors their consultants, and its evaluation and complaints

latter should allow for the individual to change their nominated consultant
and/or get a second opinion from another if they so desire.

How can we ensure that our redundancy strategy has no loopholes for legal
action against us?

I would hope that this is not the main driver towards best practice!  However, a redundant employee may have a
claim against the employer on the grounds of not having properly been
consulted, unfair selection for redundancy or not having been paid the proper

pitfall examples are:

Frequent recurrence of redundancy programmes affecting less than 20 members of
staff at one establishment with no consultation 

Possible direct or indirect discrimination against race, disability, gender or
marital status 

Misleading information regarding entitlement to severance pay for those
electing to retire early

you have a policy or agreement that has been ratified by the appropriate
union(s) or employee representatives, this should be fully implemented and
complied with.  If you have any doubt
about your strategy, it is wise to consult a legal expert before

more information on redundancy strategies, read ‘5 phases of good redundancy
management’, pages 24-25 in this week’s Personnel Today.

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