Are you experiencing the domino effect of the credit crunch?

Domino Rally

The 'Credit Crunch', 'Liquidity Crisis or 'Credit Squeeze' as you may also hear it referred to, is impacting on businesses and individuals alike. So what is it and what does it mean for HR?

Well in simple terms the Credit Crunch is where the Banks can't or won't lend. It then becomes very difficult to borrow money and therefore consumers and businesses have less to spend. This, combined with the rising cost of fuel and energy has triggered a report from the British Chamber of Commerce warning the UK of a probable recesssion.

With less disposable income, recession fears and reduced opportunity for borrowing, consumers are spending less. This is inevitably impacting on all British business with a number of large firms in recent weeks announcing job cuts.

The first to react were financial institutions who have already made a number of redundancies in London. The next hit is the housing market where further significant job cuts have been announced by UK home builders in what is described as the worst housing slump in over half a decade.

If you, like the financial and housing institutions, are considering or have taken the difficult decision to make redundancies then you need to take extreme care when managing the dismissal process to prevent the risk of tribunal claims.

At ABHR we have had a number of our clients contact us recently for advice and assistance on dealing with redundancies therefore we have provided some useful tips for effectively dealing with the redundancy process.

Top tips to dealing with redundancy

'Fair reasons'. You should document the reasons for the redundancy, as evidence is required by a tribunal to prove that a genuine redundancy situation really did exist.
Justify selection criteria Identify a suitable pool for selection and your selection criteria. Selection criteria where possible should be objective rather than subjective including areas that can be easily measured and justified such as attendance and disciplinary record. Redundancy criteria should be non-discriminatory.
Fully consult with employees. A fair procedure is about ensuring full and meaningful consultation. You should conduct individual consultation meetings to discuss the potential redundancy in detail, investigate any alternative proposals to redundancy, discuss selection process and payments etc.
Be sensitive. Redundancy affects everyone in different ways. One big mistake that organisations make at redundancy time is to act as if these people are leaving the marketplace. They're not; they go to work for your competitors or clients and how you handled making them redundant affects their views of your organization anyone they discuss the process with.
Fully explore alternatives As an employer you are obliged to consider suitable alternative employment. Redeployment can work - don't dismiss it. Often, not enough is made of redeployment opportunities and talented, loyal staff will walk out of the door who could easily be redeployed leaving a costly recruitment requirement in another part of the organisation.
Follow dismissal procedures. Redundancy is a dismissal and a fundamental aspect of any dismissal is to ensure that you follow the statutory dispute resolution procedures. Failure to follow the statutory procedures will make the dismissal automatically unfair.
Don't forget those left behind. Don't forget the impact of redundancy on those who are left behind. Very often making people redundant means additional work for those left behind and in turn those left behind can often be left feeling resentful, angry and demoralised. How you treat those affected will also impact on the trust and confidence of those employees left behind.
Seek assistance. Ensure all managers dealing with the redundancies are skilled in this area, how they handle the consultation meetings will significantly impact on how successful and painless the process is and could reduce the potential for tribunal claims. Therefore where internal skills may not be available skilled external assistance is essential.

Importantly, to maintain integrity of the process
ensure consultation is meaningful!

If you are interested in learning more about the Redundancy Process or or any other aspects of employment then please call ABHR on 0115 9743519 for your free no-obligation consultation or visit our website for further details.