Thursday 19th Mar 2020
Sometimes it’s essential as a business to cut staff. Whether because of changing market dynamics, restructuring, or a poor year, the decision has to be made. As this is a major business event, it’s important to get it right. Let’s take a look at some of the most important things to think about.
The legal bit
First things first, you must make sure that you’re cutting staff in the right way. British workers are well protected, which means that you must follow certain guidelines and processes. If you don’t have a designated HR person or department, then it’s certainly worth bringing in outside help in this respect. Getting things wrong can be costly.
Cutting staff generally means that you’re making redundancies, and one of the key aspects to this is proving that you no longer require the role at all, and there are broadly two main reasons that this might happen, as follows:
You’re closing down part of the business, or a branch of the business
You’re changing what the business does or how it does it
Ensure that you have a fully documented reason for why you’re cutting staff, and be prepared to be challenged on it. Beyond this, you must ensure that you follow legal guidelines that include things like reasonable time off for interviews, trying to find other work within the business for at-risk employees, and paying statutory redundancy where applicable.
But of course, your legal obligations are only part of the process. They’re a legal minimum that don’t always meet what’s best for business. And core to this is communication.
Keeping the wider business in the dark about cutting staff is never a good idea. While you might want to play down reasoning if it’s particularly negative, you should always be open about why you’re cutting staff, and what this means to the future. Those employees that remain with you will want to know that the decision hasn’t been taken lightly, and that they’re not under threat. If they feel insecure, they may start to look elsewhere, so reassure people with your business plan for the coming years. This approach is also essential for shareholders and any other stakeholders such as partners, suppliers and customers. If you’re large enough to receive media attention, have a tight response to questions, informed by your plan and basis for redundancy.
When it comes to dealing with the people who are to be made redundant, communication is again essential. You should never burn bridges, and it’s important to remember that these people could well work for you again in the future - or they may end up in roles at partner businesses. Ensure you’re as accommodating as possible about their departure - give them the time they need to find a new job, offer good redundancy packages where possible, and above all be honest.