Managing Redundancy In Business

II – Managing redundancy

As mentioned, redundancy generally occurs when a company is no longer able to maintain its business or is facing liquidation. As the impacts may be dramatic for the company, it is necessary for organisations to have a formal procedure for redundancy. This formal procedure appears generally as a formal agreement agreed between management and trade union or employee representatives.

Several steps must be followed in order to insure the success of such procedures and minimize the impact within the company.

1 – Planning

Organisations should always attempt to avoid redundancies. This way, alternatives might be found when possible. When a company announces that some of its employees might be subject to redundancy, it

3 - Consulting employees

European regulations have set boundaries in the way redundancy procedures might be driven by organisations within the internal market, in order to protect EU workers. The EU Directive on this question (98/59/EC) aims to improve protection for workers affected by such decisions. It sets out criteria and limits on the information collected and consultation procedures of workers’ representatives, before collective redundancies are made, as well as provisions on practical support for the employees who are laid off.

According to the Directive, “any employer contemplating collective redundancies must hold consultations in good time with the workers’ representatives, with a view to reaching an agreement”.

Such consultations must cover means of avoiding collective redundancies or reducing the number of workers affected, and of mitigating the consequences. This, in particular through the establishment of social measures aimed at redeploying or retraining those workers made

2. When, over a period of 90 days, at least 20 workers are made redundant, whatever the number of workers normally employed in the establishments in question.

4 - Selection for redundancy

After fulfilling the previous steps, individuals must be selected from within the wider pool. Employers should consult affected employees regarding the selection criteria. The criteria must be consistently applied all along the process.

Basing any selection on skills or qualification will help to keep a balanced workforce appropriate to the organisation's future needs. Such criteria are usually regarding the: length of service, attendance records, disciplinary record, skills, competencies and qualifications; work experience, performance records.

Two types of selection are usually used:

1. the ‘Last in, first out’ (LIFO). Jurisdiction has held that LIFO may be relevant as part of a wider range of selection criteria, but it must be used with precaution;

2. Scoring. To be efficient it has to be carried out independently by several managers who know all employees in the selection pool and would then give objective