A U.K. Advisory, Conciliation and Arbitration Service (Acas) study last year estimated that 19 percent of employees in the United Kingdom were likely to face redundancy over the next 12 months. More recently, 41 percent of U.K. small and medium-sized employers confirmed their fears that they will be forced permanently to shut their doors. With mass redundancies at Amazon, BBC, Twitter and Made.com in the news, it may be time to step back and consider what this might mean for you.
Why the Rise in Redundancy and Restructuring Exercises?
Everyone has been feeling the pressure of the current recession in the U.K. According to the Office for National Statistics, 91 percent of Brits reported an increase in their cost of living in October-November last year. Not only has the rise in energy costs had a similar impact on businesses, but many companies have been hit by a fall in income as consumers feel the squeeze.
All this comes from the strains and supply chain and market issues resulting from the war in Ukraine, COVID-19 and Brexit, to name a few causes. Companies struggling financially are then faced with the question of how to save costs. The obvious answer is job cuts. Reducing headcount and cutting the wage bill is seen as the fastest and—by perception at least—easiest fix.
The rules governing the redundancy process do place some constraints on employers looking to reduce headcount (the consultation process allows some breathing space for those placed at risk) but looking out for the early signs is crucial in putting yourself in the best possible starting position if your role is deemed to be one of those under threat.
Spotting the Signs
Employers will keep news of possible redundancies quiet until plans are advanced. People you know losing their jobs at competitor companies is a good indication that your industry is facing challenging times. Further hints that you are at risk are pay freezes and the halting of discretionary bonuses and perks. Have you noticed that your equipment hasn't been upgraded in a while, or that there was a lack of budget for the holiday party?
Alarm bells should also be ringing if you and your team feel overworked but vacancies are going unfilled for months. Recruitment freezes clearly show that your company is trying to cut costs. There may also be signs that your risk of redundancy is higher than your peers. Signs such as unusually close supervision, criticism of your work, a relative decrease in your workload and responsibilities, or reduced client access should be on your radar.
Some employers are resorting to "quiet firing." This involves making an employee's working life as uncomfortable as possible to try and induce a voluntary resignation, thereby removing the need for costly redundancy processes and severance packages. This could range from moving you to a less interesting or lower profile project, decreasing or even increasing your responsibilities to put pressure on you, or denying you a promised promotion, well-deserved bonus or annual pay rise.
Quiet firing is becoming a widespread concern for employees; in August 2022, there were more than 1.2 million Google searches of the term. There could be legal ramifications here, including potential claims for constructive dismissal or discrimination.
If You Are at Risk—What Should You Do?
We've all been in a position where, in a seemingly secure role, the pains of resumes and interview processes seem but a distant bad dream. However, if you may be at risk of redundancy, it's never a bad idea to be overprepared. Update your resume with your latest roles and experiences and start speaking to recruiters. LinkedIn has an option that displays your profile as 'open to new roles' for recruiters, but not when colleagues click on your profile. Remember, in a shrinking market, the early bird catches the worm.
Research the market. Is this an opportunity to change sector, role or even make a complete career change? Recruiters can be excellent sounding boards and will have a wealth of knowledge on aspects such as the salary and benefits you could reasonably expect. Even if you wish to stay in your role, brushing up on your strengths and achievements will increase your confidence and place you in good stead to argue your case in meetings. You won't be given much notice before your first consultation interview, so collate your skills well in advance to ensure you give yourself a fighting chance.
Know Your Rights
Redundancy law can be tricky to navigate but equipping yourself with knowledge of your fundamental rights will go a long way should you be thrown into the consultation process. The fairness of a redundancy process is where a claim—or negotiated settlement—is won or lost.
The first step is to ensure there is a genuine redundancy situation, such as the closure or relocation of the business or the reduction in the number of people required to carry out your role. Employers can't make someone redundant simply because they do not like you, or because you have blown the whistle, are a trade union member, or are pregnant or on maternity leave. If you believe you are being singled out for redundancy for a reason such as this, or any other discriminatory reason, you should take prompt legal advice so you can pose pertinent questions during the consultation process, which will assist with settlement discussions later.
Employers must also follow a fair process, which includes a genuine and meaningful consultation with you at an individual level, and possibly also collective consultation with your representatives, depending on the numbers involved. Importantly, this needs to be at the early stage of the redundancy situation and before any decisions have been made.
If you are placed into a selection pool for redundancy, your employer must apply objective—not subjective—nondiscriminatory selection criteria when selecting those from the pool who will be made redundant. Selection criteria might include skill and experience levels, including future skills needed, performance history and disciplinary records.
Hold your employer to account. Ask for the selection criteria and your scores for you to review. Ask your employer to justify why those criteria matter to the role and how they have arrived at your scores; and ask for the set of scores—with names redacted—so you can compare your score against others. If it doesn't make sense, object.
It is sensible to come armed with proof of your performance across the chosen criteria, including examples and data where possible, your successes and career-high points—now is not the time to be coy. View this as a mini (re)interview for your role or a suitable alternative one. When you get your score, again, hold your employer to account. Ask HR to justify how they have scored you in each category. Employers are increasingly using AI to determine who is at risk of redundancy – watch out for this as often the algorithms are tainted with discrimination on account of the programmers' unconscious—or even conscious—bias.
You may be able to bring certain evidence and explanations to light that assist your case. Start pulling together questions for HR. What is the process? How has the selection pool been identified?, Who is making the decision? When was the decision made? More often than not, the employers have already decided who is in and who is out before the consultation has concluded and, in some cases, even started.
Making the Most Out of a Redundancy
It may be the case that, having explored your options, redundancies are announced at your workplace, and your employer offers the possibility of voluntary redundancies. Voluntary redundancies do what they say on the tin; those who accept will still receive a redundancy package, and the company will avoid or decrease the number of involuntary redundancies it makes. If you've found another role you prefer, being prepared could work in your favor. Ensure you are fully aware of the terms of any voluntary redundancy package.
However, do consider if it is more beneficial than being made compulsorily redundant following a consultation process. If you have income protection insurance or plan to claim any benefits while you are between jobs, you should ensure that these will not cease to apply if you opt for voluntary redundancy. Likewise, you don't want to miss any bonus payment for the year or award of shares because your termination date falls before the bonus payment or vesting date. If you are unsure, get advice before you raise your hand.
If the unthinkable does happen, and you are faced with compulsory redundancy, many employers will offer you a settlement agreement, with an enhanced redundancy payment, in exchange for you giving up the right to bring any claims against your employer. Take your time to consider the offer, and don't get pressured by your employers' self-imposed timeframes for acceptance. Under Acas guidance, you should be given a reasonable timeframe to consider the settlement terms.
The terms of settlement agreements are up for negotiation. This includes not only the financial aspects, such as the compensation payment, notice provisions, bonus and shares, but also the nonfinancials, including references, announcements and extension to benefits. To be legally binding, you must take legal advice on the terms of a settlement agreement. This is more than a simple sign-off, so don't wait until the deadline. Receiving input from a lawyer early to assist you with negotiating can ensure you walk away with the best possible outcome.
Being told you are at risk of redundancy and being put through a selection process are never easy, even if you are confident that you will ultimately not be selected or that a redundancy package might not be the worst option. It can help to have someone by your side to support you in navigating this difficult time, ensure your employer complies with its legal obligations, and negotiate the best possible outcome for you.
Ruby Dinsmore is an attorney with Penningtons Manches Cooper in London. © 2023 Penningtons Manches Cooper. All rights reserved. Reposted with permission of Lexology.