Redundancy Preparation: Due Diligence
Updated: Aug 5, 2019
By this point, you’ve worked closely with your business to draft a list of employees for redundancy consideration by using your selection criteria matrix. Before you can proceed, you must conduct an additional layer of due diligence. This diligence is really critical to ensuring that your redundancy exercise goes smoothly, that all employees are treated fairly and that no laws, regulations or company norms are broken. Below are some of the red flags you should check.
A redundancy exercise can be a potential minefield for litigation, particularly around discrimination claims. Each country has its own definitions of protected groups of employees and it is extremely important to understand what they are and how to navigate them. To that end, I recommend that you consult with a local employment lawyer. Below are a few of the common ones.
If you have an employee who has been on an extended sick leave due to a serious illness, or someone who constantly calls in sick and has a poor attendance record, you must exercise extreme caution. The first thing to consider is local employment legislation. Can you make someone redundant who is on sick leave? It may be illegal for you to communicate to the employee if they are off sick. You may also open yourself up to a disability discrimination claim, as I note below.
Depending on the laws in your country, regardless of the employee’s health, you may be able to proceed with the redundancy, assuming that other redundancy criteria are met. For example, if the role is truly disappearing (the whole team, office or country is being cut or closing), then a discrimination claim is less likely. This assumes that the organization has acted appropriately toward the employee in the weeks, months or years leading up to the redundancy. For example, if the organization already has a pattern of bad behavior toward the employee (which could be construed by the employee to be because of his or her sick leave or illness) then your organization is at higher risk for a discrimination claim.
Here in Hong Kong, women are protected by the employment ordinance from termination whilst they are pregnant and during the period of statutory maternity leave. Although this is the way it should be everywhere, women are not afforded this same protection in all countries. If a female employee on your draft redundancy list is pregnant, think carefully about how to proceed.
Legal considerations aside, you should think long and hard about whether or not this is the right action to take as an organization. Of course, if an entire office is closing, then you may not have much choice, but in cases where you are eliminating a certain percentage of the team, you should really scrutinize the selection criteria you have used to place a pregnant employee on your redundancy list. If you suspect that a manager is trying to use the redundancy as an “easy out” to avoid paying maternity leave or the disruption that comes with an employee being out of the office for a significant period of time, then they probably are. As an HR Leader, it is your job to challenge and check these types of decisions to ensure that they stack up.
Finally, in my experience, it is often other employees who are even more upset about their pregnant colleague being made redundant. It gives them the impression that the company does not care and is heartless. This residual damage could do more to weaken your employees’ trust and loyalty than the overall redundancy exercise itself. Think about it.
As I mentioned above, some countries may restrict you from communicating to your female employees whilst they are on maternity leave. It’s possible that this could also apply to your male employees who are on paternity leave, so it is worth checking. Separately (purely from a practical perspective), you will need to know if any of the employees on your draft list are out of the office on either maternity or paternity leave so you can determine in advance how you will contact them. Make sure you have their personal contact details and have discussed internally the best way to communicate to them.
In Hong Kong, the Disability Discrimination Ordinance (DDO) is fairly broad and can include protections for things like the common cold and stress. As I mentioned above in relation to pregnancy and illness, if an employee on your draft redundancy list has a disability, I recommend that you consult an employment lawyer.
There are numerous other categories of protected employees that may be relevant and should be questioned during this due diligence phase, including: race, age, sex, family status, and religion, to name a few. One reliable method for doing this is to review your ratios to make sure there aren’t any outliers. For example, if women, minorities or those with a disability are disproportionately represented on your draft list, you may need to re-review your selection criteria and methodology.
In larger organizations, you may have employees who are married to one another or are related – siblings, parents and children, etc. Hopefully, you will already have a system so you are aware of these relationships (such as a disclosure policy). If a husband and wife or a father and son are both on your list, perhaps take a step back to consider if either of the roles can be saved or one of the individuals can be reskilled and redeployed. If these options have already been considered, see if your organization can offer a more focused redeployment services for these employees. Of course, I’m not suggesting any special treatment, but an acknowledgment of the impact of two breadwinners in the same household losing their job can go a long way.
Once the date of your redundancy exercise is firmed up, you will need to discreetly confirm which employees will physically be in the office that day. If some of them have business trips, find a way to reschedule or cancel them. If employees have personal travel booked, you will have to determine your company’s approach. Will you call that individual while they are on holiday and communicate the redundancy over the phone, or will you wait until they return to the office and tell them immediately? If an employee has only one day booked as holiday and it is flexible, see if they can adjust their schedule to remain in the office. Of course, this must be done with care so the employee does not suspect anything is amiss.
Some employees may also be unexpectedly sick on the day of the redundancy exercise. This should be flagged immediately and again, a decision should be taken on whether or not to communicate to that person that day or wait until they recover and return to the office.
This may seem like a silly one, but no one wants to be fired on their birthday. Of course, if the date of the redundancy exercise is pre-determined by the company, you certainly can’t change it just because it is one employee’s birthday. However, awareness of it can be helpful. You can acknowledge it during the meeting and address it accordingly.
The above list of red flags is not exhaustive, but hopefully it provides you with a starting point to conduct your due diligence. If there are other approaches that you use at your organization, please leave a comment and share.
In next week’s article, I’ll turn the tables and discuss what employees should do if they think they are about to be made redundant. We may all find ourselves in that situation at one time or another, so I’ll provide some practical suggestions for preparing yourself.
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Renee Conklin is an HR Leader who writes about talent attraction, employee engagement and the future of work. She is the founder of RC HR Consulting.
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