Leaders within any business have a responsibility to make decisions that are going to shape its future success. The method of how you decide to do this is likely to vary depending on things such as future goals, financial stability and the culture and values of the organisation.

There have been several experts who have given opinions on the recent P&O Ferries redundancies which happened on 17 March 2022. P&O Ferries have been widely criticised for the decision they made to fire 800 employees on the spot via a pre-recorded video.

In this situation, with a crew now based on agency workers, will they still be able to have the reliability that they have now? Will they have damaged their reputation beyond repair? Are they now going to have a crew with no engagement or loyalty? It has been proven that there is a significant correlation between employee engagement and customer satisfaction, which could now have been damaged as result of their actions.

The Trade Union Congress (TUC) has stated that “It must be a turning point for employee relations in the UK” and they have called for an end to firing and rehiring practices; an increase to the fines for companies that break employment law; and to ban other exploitative practices.

Even if P&O Ferries are able to take advantage of a “loophole” where they are covered by maritime law and not employment law, the longer-term effects on their brand and reputation could be significant. Customers now more than ever tend to be concerned with choosing brands that are aligned with their own values.

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Following a correct redundancy process

If you have had to make the decision to make redundancies within your business, following the correct process is essential. You need to establish that there is a genuine redundancy situation and ensure you follow a lawful process, including consulting with those affected and applying a consistent and fair selection criterion.

The risks of not following a correct process could result in an unfair dismissal claim. As of 6 April 2022, the Employments Rights (Increase of Limits) Order 2022, has increased the limits for claims:

  • The limit on a week’s pay to £571 for calculating redundancy and the unfair dismissal basic award, an increase from £544
  • The increase to a week’s pay means the maximum basic award for statutory redundancy payment and unfair dismissal is now £17,130 increased from £16,320
  • The maximum compensatory award for unfair dismissal has increased to £93,878 or a year’s pay, whichever is lower.

Whilst redundancy is a reason for dismissal it does not necessarily mean that the dismissal was fair.

Alternatives to redundancy

Coming to the decision in any business that you need to make redundancies should never be taken lightly. You have a duty to consider other alternatives that could be implemented and making a redundancy should be the last resort. Think about whether you have any suitable alternative roles within the business that someone could do – could you offer them a trial period in another role or, give them the opportunity to decide if there are alternative roles that they might be interested in?

Effects of redundancy

You need to consider what effect making redundancies will have on your business. You could risk long-lasting damage to staff morale and employment relations, as well as damage to your reputation and brand. There is also the cost of management time that will be necessary for administration, planning and consulting.

If you do have to make redundancies, ensure that you support the person/people being made redundant by offering to help them with their CV, allowing them time to go to other job interviews or speak to professionals that may be able to help them.

Recognising that Covid and now the energy crisis has posed incredibly difficult challenges for businesses, it is still important to consider the decisions you make and the way in which you carry them out. They can have a long-lasting effect, both positive and negative, on your business.

If you are thinking about making redundancies, please feel free to contact a member of the MAD-HR team who will be able to help support you through this process.