Managing in a recession

Saturday, 14 February 2009 00:00

After the Christmas festivities will we wake up to a massive hangover at the start of 2009? And if your business is affected what costs will you cut in order to stay alive. One area to look at closely is of course staff costs which account for the largest part of any businesses overheads.

If you are, the secret of success is pre-planning. It is essential to decide at the start the nature and extent of the savings you must make, the areas most affected, and the timescale.

The process has three key elements - consultation, selection and implementation. Consultation involves discussing with staff affected the need for cuts and seeking their input on alternatives like reduced hours. If you are making more than 20 employees at one location redundant at any one time, then this is a collective redundancy and there is a statutory requirement to consult for at least 30 days (90 days if 100 or more staff). But if fewer than 20 staff are affected then the consultation period is not fixed by law and can be made shorter - typically a week.

The next step is selecting from the "pool" of those at risk, those employees who will be made redundant. The selection criteria must be objective and fair and you must give employees the chance to challenge your assessment of their score.

And lastly, there is implementation. It is important to remember that redundancy is still a dismissal and therefore an employer must comply with the three step Statutory Dismissal Regulations.

Employees are entitled to statutory redundancy payments if they have been with a business for 2 or more years; the payments are capped at the lower of either a week's gross pay or £330 (increasing to £350 in February) with a multiplier of 1½ for service years over the age of 40.

Tozers Top Tips are - read the ACAS Code of Practice on redundancy handling - it explains everything clearly. Consult thoroughly. Ensure that your selection criteria are fair and objective. Don't forget the dismissal regulations. Follow these simple rules and you will avoid the cost and unpleasantness of a tribunal claim at a time when you least want it.