Laying Off Employees Small Business

When they are thinking of laying off employees, small businesses must follow a fair procedure. Failing to do so can render any dismissals they make unfair and enable the affected employees to bring unfair dismissal claims in the Employment Tribunal.

Here, our skilled HR and employment law professionals give a general overview of the legal requirements relating to laying off employees in a small business.

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What Is Redundancy?

Before laying off employees from your small business, you must be confident that the situation is one of genuine redundancy.

Redundancy is a form of dismissal that applies when a role is no longer needed. Examples of the types of circumstances that can justify redundancies include the following:

The business is failing.
The business is insolvent.
The business no longer needs the skills the employee holds.
The business has undergone a reorganisation, and the employee’s role is now being carried out by other people.
The business is moving to a different location.

If you’re unsure whether the situation is one of genuine redundancy, you must take expert advice before taking any action. If you get it wrong, your actions may be unfair, and you may face lengthy, expensive Tribunal proceedings.

What Is The Process For Laying Off Employees In A Small Business?

A general overview of the process for laying off employees in a small business is as follows:

Establish your reasons for the proposed redundancies and check that those reasons are fair.
Consider whether there are any alternatives to redundancy, such as a recruitment freeze or job shares.
Draw up your selection criteria, which must be objective and measurable.
Go through an effective consultation. How you should consult with employees depends on the number affected. Where 20 or more employees are at risk, you must collectively consult, which involves liaising with the employees’ trade union representatives or staff members elected to act on the affected employees’ behalf.
Select the employees for redundancy with reference to your selection criteria.
Give notice to those employees selected for redundancy.
Pay all sums due to the redundant employees, including redundancy pay.

Communicating effectively with all affected employees, not just those whose jobs are at risk, throughout the process is crucial. By explaining your reasons behind your small business having to lay off employees and ensuring everyone understands how the process will work, you can significantly reduce the extent of any ill-will towards your business from both those employees eventually selected for redundancy and the ones kept on.

Why Is It So Important To Get It Right When Laying Off Employees As A Small Business?

The importance of acting fairly when laying off employees in a small business cannot be overstated. Not only must you act fairly, but you must strive to ensure your employees perceive you as having done so. Failing on either count can have severe consequences, including the following:

• Your Business Might Be Sued For Unfair Dismissal.

Legal proceedings are time-consuming and expensive. In addition to the legal fees you will incur, crucial personnel may need to take time away from their regular duties to work on the matter, including gathering information and documentation in support of your position and providing witness statements.

Unlike in civil court cases, the winning party in an Employment Tribunal claim is not generally awarded their costs. This means that, even if your defence succeeds, you will likely be considerably out of pocket for having been forced to defend the allegations.

• Your Business’s Reputation Will Be Harmed.

Being embroiled in an unfair dismissal claim can have disastrous consequences on your business’s reputation, both with the public and key third parties, such as suppliers. Even if the claim fails, the fallout from the incident can be severe.

• Your Workforce’s Morale And Productivity Can Suffer.

When employees see one of their colleagues being treated unfairly, they often feel aggrieved on their behalf. They may start to mistrust you and fear for their own job security, causing a drop in morale and, ultimately, productivity.

• You May Lose Employees

If your employees begin to question your fairness as an employer, their loyalty towards you will decrease, and they may look for alternative employment. In worst-case scenarios, an unfair redundancy process, or one that is deemed unfair by your workforce, may result not only in the loss of those employees you laid off, but other key personnel as well.

How Can We Help With Laying Off Employees In A Small Business?

At Gap HR, our expert HR and employment law professionals have decades of experience assisting small businesses considering laying off employees. Not only will we ensure your redundancy process is fair and above reproach, but we will also assist you in communicating effectively with your staff throughout. By ensuring your employees feel valued and understand the reasons behind your actions, we will minimise any ill-feeling and ensure your business can emerge from the experience with a streamlined, motivated workforce.