Redundancy based on employee competency

2004

Employees’ skills and competencies are more important than the job they do in selection for redundancy, while the line managers’ verdict is crucial in the selection process, according to new research examining the way companies manage staff redundancies.

While the law on redundancy selection states that the procedure used must be fair and reasonably applied, a survey of 89 private and public sector employers by IRS Employment Review found that the factors affecting the decision vary greatly.

Almost nine out of ten respondents (87 per cent) said that they had made employees redundant in the past two years, with the scale varying from individual redundancies to losses approaching 1,000 employees.

Just over half (54 per cent) of the organisations quizzed who had made redundancies said that voluntary redundancy was used while three-quarters had made compulsory redundancies. Four out of ten had used both methods.

A total of 8041 jobs were lost across the all the companies, representing eight per cent of their total workforce. Almost half (46 per cent) the respondents also said that workforce cuts were expected over the coming year.

Two-thirds of employers surveyed did not report any productivity improvements as a result of job losses. Almost two thirds (62 per cent) of employers found that redundancies had led to lower morale, but one in three believed that the productivity of their organisation had improved.

A smaller, but still significant, number also believed that redundancies had led to the loss of organisational skills and organisational memory in their workplaces.

While a quarter of employers said that they use a straightforward “last in, first out” (LIFO) method of selection for redundancy, fewer than two per cent of employers used length of service exclusively.

Over half (53 per cent ) use length of service as a factor alongside the job done by the employee or their level of skills and competencies. Others said that length of service was used only as a last resort.

Six out of ten employers also said that they use attendance as a criterion, with any absence – even covered by a doctor’s certificate - appearing to count against an employee in the selection process. Eight out of ten employers said that even certified sickness leave would count against an employee.

Over half of employers surveyed thought that the forthcoming Information and Consultation Directive would not have any effect on the way they currently consult and provide information to employees in a redundancy situation.

IRS Employment Review managing editor, Mark Crail said that the survey reinforced a picture of organisations under pressure to restructure, not just in response to immediate market conditions but as a continuous response to change.

“Perhaps because redundancy management is an area of some experience for many HR managers, most employers in our survey believe that they are managing it well," he said.

"But what employers highlight as an area for improvement in our survey – and what they will need to pay more attention to when the Information and Consultation Directive is phased in from March 2005 – is communication and consultation with employees."

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