Questionnaire: Should I Make My Employees Redundant?

Redundancies are currently on the minds of many business managers – and, of course, of employees. Currently, consumers have considerably less money to spend than they did a year ago; very few sectors of the economy are immune from the effects of the recession. It is only natural, therefore, for companies to look for cost-cutting measures. For many, redundancies are the most obvious such measure.

Redundancy alternatives

However, it should be remembered that redundancies are not necessarily the most beneficial choice, either for you or your employees. Redundancy can be an expensive process; unless you are entering insolvency, you may well have to give a redundancy payment of some sort to employees you are laying off.

Furthermore, when your company begins to expand again, you will need to rehire people to keep up with the increase in demand. The hiring process is very costly; a recent survey suggested that it costs almost £6,000 to hire a single employee. As such, redundancy is not always the best option. This questionnaire will help you decide whether or not you should make employees redundant.

Questionnaire

• 1. Are you currently finding it difficult to pay your employees’ wages?
• 2. Is there too little work to go around your employees?
• 3. Have many of your employees had fewer than two years’ continuous service with your company?
• 4. Do you anticipate that your company will not grow within the foreseeable future?
• 5. Will you be able to cover the costs of redundancy payments in the event that any affected employee is entitled to them? More information on the criteria for entitlement is available in articles elsewhere on this site.
• 6. Have you explored the alternatives to redundancy?
• 7. Have you found that short-time, sabbaticals, restrictions on overtime and other similar practices are unworkable or unsuitable for your company?
• 8. Are you aware of your statutory responsibilities with regard to redundancy, and are you confident that you can fulfil them?
• 9. Is your company entering insolvency?

Answers

If the answer to the final question is ‘yes’, then you will clearly have no choice other than to make members of staff redundant. This is, generally, the only circumstance in which you will not be required to make redundancy payments.

If you have answered ‘yes’ to the majority of the remaining questions, redundancy may be a suitable option for your company. Question 3 refers to the statutory responsibility to grant redundancy pay to employees who have been with you for more than two years. Making redundancy payments can significantly increase the cost of the exercise. Similarly, question 4 aims to make you think about the expense of hiring new employees in the event that your company recovers and find itself short of staff.

Responsibilities

It is vital to remember that companies have important responsibilities when it comes to redundancy. If you cannot afford to fulfil these responsibilities then redundancy is not an option for you. However, if it is not economically viable for you to continue paying staff with too little to do then, providing you are well versed in the redundancy process, you may wish to consider reducing your workforce.