A new survey reveals that redundancy is increasingly seen as a quick fix for turning around struggling businesses. Jessica Davey and Vanessa Molyneux report
It is a sad fact that businesses, under constant pressure to perform in the current economic climate, are now making redundancies on some scale. Recent press reports suggest up to 20,000 imminent job losses in the City, for example. In this difficult climate, international law firm Allen & Overy has conducted a survey of employers to establish current trends in redundancy practice.
On the whole, the results demonstrate that most employers have a good understanding of the legal requirements on both collective and individual redundancies. Nevertheless, some results were surprising.
In some sectors, collective consultation on redundancies has yet to catch on. Within the financial sector, almost half of the organisations surveyed said they never consulted collectively. The situation was dealt with on an individual basis and, in the case of more than a quarter, by increasing compensation packages to buy out the risk of a compensation award.
Also revealed was the fact that the days when UK employers selected for redundancy on a 'last in first out' basis are over. Performance and skills are now key factors in the selection process, with employers taking a more strategic view in the highly competitive market conditions by retaining those employees most able to drive their business forward.
Taking part in the survey, conducted by Allen & Overy's Workplace Representation and Consultation Group, were 125 organisations, of which the majority (68 per cent) had 500 employees or more, 27 per cent had 51 to 500 employees, and employers with fewer than 50 employees made up 5 per cent.
Respondents were from a wide range of organisations, from FTSE 100 companies, investment banks and City of London institutions to charities, universities, regulatory bodies and small businesses. The questionnaire also categorised respondents by industry sectors covering finance, manufacturing, technology, media, retail, pharmaceuticals and leisure. The largest response came from the financial sector (39 per cent).
Almost three-quarters of respondents had some form of redundancy policy in place, either oral or written. What was surprising is that as many as 36 per cent had a