Employers expect more redundancies in 2023; is your business prepared? - Gearalt Fahy

With the cost-of-living crisis raging on, a rise in the use of automation and artificial intelligence, and the continuing after-effects of Brexit, businesses in the tech, retail, construction, manufacturing, finance, and hospitality worlds have already acted, and more will follow as they seek to recover from the economic impact of the pandemic.

This begs two important questions that employers need to consider: is your business prepared for a redundancy process? And do you properly understand the risks of getting it wrong?

There is no getting away from the fact that redundancy processes are tough for everyone involved, from senior managers making the decisions to direct line managers having to deliver those difficult messages to the employees who may end up losing their jobs.

The stark reality of the UK economy means that further redundancies are unavoidable, but there is a right way and a wrong way of handling the process and businesses need to think about the long-term risks that a rushed or flawed redundancy process can bring.

The most crucial step an employer can take is to protect themselves, but it is equally vital to treat employees with care and respect. Getting a redundancy process, particularly a largescale redundancy process, wrong can be costly and potentially lead to individual and/or collective claims worth millions.

The reputational impact of a poorly handled process can be as much of a risk to your business in terms of recruitment and retention, and should not be overlooked. A recent example of this is the negative publicity that followed P&O's actions in 2022.

Large scale redundancy processes are complex and completely different to small scale.

However, WBD's research shows that of those employers planning to make redundancies this year, 80 per cent believed they had a clear understanding of the process to follow. However, with changes to employment law coming thick and fast, seeking legal advice and guidance to ensure you're on the right track is more important than ever.

In April, a raft of employment law changes came into effect. These included an increase in tribunal awards, meaning a poorly executed redundancy process could be even more costly to your business.

Nine more employment related Bills are currently working their way through Parliament (and likely to become law), so the pace of change for those involved in HR and the redundancy process is unlikely to slow anytime soon.

It's not all about new laws, though. Employers need to engage in a new way of approaching redundancy situations and be mindful not just of the need to cut costs, but dealing with employees in a respectful manner. Failing to do so will have unintended consequences reputationally and could mean employers lose people they don't want to or can't afford to, while it may also hamper attempts to recruit in other areas where demand remains high.

Leeds-based Gearalt Fahy is UK employment partner at law firm Womble Bond Dickinson