Letting staff go: how do employers really manage it?

Employeesí skills and competencies are more important than the job they do in selection for redundancy, and the line managersí verdict is crucial in the selection process, according to a report released today (16 July 2004) by IRS Employment Review, published by LexisNexis.

While the law on redundancy selection states that the procedure used must be fair and reasonably applied, the factors affecting the decision vary greatly, as the survey of 89 private and public sector employers reveals. The results are available in the new issue (803) of IRS Employment Review (www.irsemploymentreview.com).

Most respondents (87%) said that they had made employees redundant in the past two years. These varied from individual redundancies to large-scale job losses such as the 1,000 employees made redundant by a UK charity and 800 employees made redundant by a major manufacturing company. Overall, 36% of the total redundancies reported by employers were in manufacturing, 10% were in public services and 55% were in the services sector. In total, survey respondents made 8,041 jobs redundant during the past two years - 8% of the total number of people they employed.

Two-thirds of employers surveyed did not report any productivity improvements as a result of job losses. Almost two thirds (62%) of employers found that redundancies had led to lower morale, but one in three believed that the productivity of their organisation had improved. A smaller, but still significant, number also believed that redundancies had led to the loss of organizational skills and organisational memory in their workplaces.

Key findings:

Just over half (54%) of the survey respondents who had made redundancies said that voluntary redundancy was used while (76%) had made compulsory redundancies. Of the total, 32 (41%) organisations had used both methods.

Almost half (46%) the respondents reported that workforce cuts were expected over the coming year. Of these, 37% were in the services sector, 39% were manufacturing or production companies and 22% were in the public sector.

Twenty-one (24%) employers said that they use a straightforward ìlast in, first outî (LIFO) method of selection for redundancy. Fewer than 2% of employers used length of service exclusively. Over half (53% ) use length of service as a factor alongside the job done by the employee or their level of skills and competencies. Others mentioned that it was use ìas a last resortî.

For those employers (60% of the sample) who use attendance as a criterion, certified absence appears to count against an employee in the selection process almost as much as unauthorised absence. Most employers (81%) said that leave covered by a doctorís certificate would count against an employee and 87% said that self-certified leave would do so.

Over half of employers surveyed thought that the forthcoming Information and Consultation Directive would not have any effect on the way they currently consult and provide information to employees in a redundancy situation.

More than 8 in 10 (84%) of employers surveyed made no changes to their redundancy pay arrangements over the past two years.

A majority of employers (86%) indicated that they would provide reasonable time off or as much as staff need to look for employment elsewhere.

IRS Employment Review managing editor, Mark Crail said:

ìThe IRS 2004 survey comes at a time when the pace of economic growth is picking up, but manufacturing unions in particular still have cause to highlight the continuing level of redundancies in their sector. Our in-depth look at redundancy reinforces this picture of organisations under pressure to restructure, not just in response to immediate market conditions but as a continuous response to change.

ìPerhaps because redundancy management is an area of some experience for many HR managers, most employers in our survey believe that they are managing it well. But what employers highlight as an area for improvement in our survey - and what they will need to pay more attention to when the Information and Consultation Directive is phased in from March 2005 - is communication and consultation with employees.î