Five things no one tells you about making people redundant.
Some points to think about if you ever must go through this process yourself.
Due to dramatic downturns in business because of the Covid-19 pandemic, we have just gone through a restructuring at work. I coördinated it locally, with guidance from my regional team. It sucked, but you do not have to be a genius to work that one out. Restructuring — in the U.K., often code for ‘redundancies’ — is never easy for anyone involved. From a Human Resources point of view however — and being a novice to this whole sorry process — I had some surprising observations.
1. There’s a lot of paperwork involved.
In the U.K., when undertaking any restructuring process, a consultation process underpins the whole exercise. The more people you are expecting to make redundant, the longer the consultation process (a large-scale restructure like the one at my workplace required a forty-five-day collective consultation process before any individual discussions). Once consultation has concluded, that’s when you can decide who might stay and who might go.
Then there’s letters. Lots of letters. Letters telling people what is going on. Letters asking if the employee is happy with their departmental representative in the collective consultation process. Letters asking the representative if they actually want to be a representative. Letters telling employees they are at risk and will now be assessed according to their annual review rating, questions, etcetera. Letters telling people they are still at risk after the assessment, and letters inviting them to a first and second individual consultation. Then of course, a letter telling them that it’s “adios” and informing them of right to appeal, payments and so on… and I haven’t even told you what happens if you’re going near someone on maternity leave or an expectant mother.
Letters usually bookend some form of collective or individual meeting; there are indeed lots of meetings as well. The letters and the meetings — the process — is king.
In theory, you can select someone for redundancy for any manner of specious or spurious reason (bar discrimination), but if the process has been followed, the correct letters have been issued and consistency has been observed, an employment tribunal will almost certainly throw out any claim of unfair dismissal.
2. The letters and the meetings manage the five stages of grief.
After forty-five days of collective consultation plus two individual consultation meetings, with days in-between to allow time to prepare, most affected employees can see what is on the cards long before the time they are told they no longer have a job.
In the run up to the beginning of the restructuring process I was trained to manage the employee journey through Elisabeth Kübler-Ross’ five stages of grief (denial and isolation, anger, bargaining, depression, and acceptance).
In the end, after over two months of meetings, all I witnessed was a ton of acceptance. The length of a consultation process effectively sterilises a large chunk of the emotional baggage for everybody concerned. By and large, the employees understood what was going on (some even had time to find new jobs, or simply beat the quarantines and head home), and my team and I rattled through the process on autopilot. Just yesterday we sat together over a coffee and wondered if the shock of making over fifty people redundant would hit us at some point, and if so, when and how hard.
I also retrospectively wonder if holding all meetings online, via Zoom, made the process easier still. An employee might be marginally happier being served up a plate of bad news while he/she is sat in their lounge in a pair of sweatpants, rather than being dragged to a boardroom halfway across the city.
3. You will be fighting with the accountants more than the employees.
Redundancy is an expensive exercise. In the U.K., statutory redundancy pay is calculated on your salary, your length of service with the company, and your age. I am paid roughly an average salary for London, have a few years’ service and am not that old, and if I am made redundant, I would collect a lump sum of over £30,000, much of which is tax-free.
If there was any ‘anger’ or ‘denial’ coming from our employees in the early days of collective consultation, it was from people asking why we were doing what we were doing, paying out large chunks of money at a time when businesses are still able to significantly benefit from the government’s Coronavirus Job Retention Scheme (as of August, this scheme sees 80% of employee wages coming from Boris and Co., with 20% employer top up optional, the only mandate being to contribute pension and National Insurance payments).
The response to this genuinely good question is the simple fact that the C.J.R.S. does become progressively more expensive for employers in the run up to its closure on 31st October 2020 (mandatory 10% top up of wages in September, and 20% top up in October).
Another factor is that there are elements of redundancy payments (such as notice pay) which can be covered under the C.J.R.S. For my company and my industry — looking at business forecasts for the end of 2020 and beyond — it’s not a question of if we are going to go through redundancies, but when. It does therefore make sense to get this unfortunate business done now, while employers can shield themselves from additional costs.
These above points are horrendously dull (and when it comes to using state support to fund redundancies, difficult to digest) but of immense importance, especially for industries like mine which are in truly dire straits.
In my company, a dispute over where the money for the severance packages would come from compounded the challenges. I found myself having almost daily discussions with those who control the purse-strings over how much of the total redundancy bill can be covered by the C.J.R.S., when we are legally obligated to pay it and to come up with creative ways to lower the cost, full stop. That last point had many positive outcomes as we were able to save quite a few jobs through voluntary reduced hours or sabbaticals but being in a position of having to argue over who has to pay 20% of a waiter’s £1,400 notice wasn’t what anybody needed.
4. Goodwill goes further than you might think.
My mentor, a fellow Head of H.R., has a motto: “kill them with kindness”. Whereas the language is, shall we say, ‘barbed’, the message was never more relevant than during this restructure process.
Taking time to listen to employees — even spending time with them on the phone at eleven at night, helping them understand the process, how much they would be paid or even just to listen while they cried — went a long way.
As with many elements of the whole process, the more I think about this approach the more I question “why?”. Goodwill is win-win. I tried to treat my at-risk employees that way I would want to be treated if I was going through this myself, i.e. with compassion, patience, respect and honesty.
The other wide of the coin is that content associates who have been treated well are more likely to view the sad situation with a ‘glass half full’ mentality. They will be less likely to appeal and raise legal processes such as claims for unfair dismissal. As with many things in H.R. the motive is more important than the action. Having the right personalities and the right people in your team will help no ends.
5. You will cry… but you will laugh as well.
Yes, there were some crushingly sad meetings where manager and I were reading through the consultation script, eyes welling up and voices faltering. That was to be expected.
Conversely, it’s obvious that redundancy can be good news for some. One employee, recently divorced, welcomed the pay-out and is now relocating back to her home country to start her new life. Another was on the verge of leaving in a year or so to focus on managing a small property portfolio he owns and will use his severance to get on this full time, right now. A friend of mine in a different hotel was only a year or two away from retirement, so welcomed the chance to get paid a bucketful of money to go a little bit earlier.
What I wasn’t prepared for were associates laughing their way through consultation meetings. One guy — who has already found another job — attended his consultation meeting midway through a house party, topless and drinking beer. Another one made “ka-ching!” noises as we read out elements of his severance package. We reminisced with some, made banter with others, just like any normal working day.
For many employees, the meetings that were advising them of their inevitable fate were simply a chance to catch up with their manager and have a chat after months of lockdown and furlough. I just sat and took the minutes, and for my own sanity and that of the managers, scheduled the happy meetings to alternate with the ones that would likely be sad. That’s another thing I learned, come to think about it.
Originally published 15th August 2020.
Photo by Keagan Henman on Unsplash.