Redundancy - best practice guide

23 Dec

Managing Redundancy: Best Practice Steps According to CIPD Guidance

Redundancy is an inherently challenging process for both employers and employees. It is essential for organisations to approach redundancy with fairness, transparency, and compliance to ensure the best outcomes and minimise legal risks. The Chartered Institute of Personnel and Development (CIPD) provides well-established best practice guidance to manage redundancy effectively.

1. Identify the Need for Redundancy

The process begins with a clear, objective identification of the reasons for redundancy, such as organisational restructure, technological changes, or financial pressures. Employers should document the business rationale and consider alternatives to redundancy, including redeployment or voluntary redundancies.

2. Planning and Consultation

Organisations must plan the redundancy process carefully. This involves:

Informing and consulting employee representatives or trade unions early, where applicable.
Communicating openly with affected employees about the reasons, proposed selection criteria, and possible outcomes.
Complying with statutory requirements, including collective consultation thresholds (usually 20 or more employees affected).

3. Fair Selection Process

Selection for redundancy must be objective, transparent, and non-discriminatory. Common selection criteria include skills, performance, attendance, and disciplinary records. It is important to avoid unfair discrimination based on protected characteristics such as age, gender, ethnicity, or disability.

4. Exploring Alternatives

Before confirming redundancies, organisations should actively explore alternatives such as:

Redeployment to other suitable roles within the organisation.
Offering voluntary redundancy or early retirement schemes.
Temporary lay-offs or reduced working hours.

5. Individual Consultation

Each affected employee must be consulted individually. During these meetings:

Explain the reasons for redundancy and the criteria used.
Discuss any alternatives or support available.
Provide time for the employee to ask questions and offer suggestions.
Advise on appeal procedures.

6. Notice and Pay

Once redundancy decisions are finalised, employees must be given the appropriate statutory or contractual notice period. Employers should also ensure redundancy pay is calculated correctly in line with statutory entitlements or contractual agreements.

7. Support During and After Redundancy

Supporting employees through redundancy reduces negative impacts on morale and aids transition. Support measures may include:

Outplacement services and career counselling.
Training and skills development.
Access to employee assistance programmes.

8. Document and Review

Maintain comprehensive records of the entire redundancy process, including selection criteria, consultation notes, and communications. Following the process, review the approach to identify lessons learned and improve future practice.

Adhering to CIPD best practice standards in redundancy helps businesses manage change responsibly and maintain positive employee relations, ultimately supporting sustainable organisational growth.

Sarah Ralph