Joan Pettingill, employment partner at HLW McCombie Commercial Lawyers, offers her advice on how to avoid a legal backlash when reducing staff numbers.

AS THE effects of the credit crunch continue to hit the property and construction sector, companies are looking at how to tighten the purse strings. That, inevitably, means reducing staff numbers. As an ever-increasing mountain of rules and regulations govern staff employment, however, it is vital that bosses don’t fire in haste and repent at leisure.

The first thing any company should do when considering making any staff roles redundant is to check that the people in the company managing the process are well briefed.

This includes ensuring that the precise terms of an employee’s current contract of employment are known. This can sometimes be a task in itself.

An audit of all employment paperwork can assist. Some companies do not have central personnel records for each staff member and it will therefore be important to pull together the relevant documents.

Equally, check that your line managers are trained to understand the staff handbook and brief them so that they can respond to queries from staff members without inadvertently giving rise to a grievance. All companies want the redundancy process to go as smoothly as possible and taking these steps will help.

Compile accurate figures on the possible risks and costs associated with terminating each member of staff. This could include statutory and contractual costs in line with fair redundancy dismissals.

Companies sometimes end up getting into disputes with staff about whether or not they should be selected for possible redundancy because the roles and responsibilities for an employee are not clearly defined.

This means that the pool from which employees might be selected for possible redundancy can sometimes be unclear. Occasionally employees’ roles change and what they are actually doing isn’t properly reflected by their job description. Disputes about this can slow down the redundancy consultation process. It is therefore vital to ensure that each employee has a job description with defined roles and responsibilities.

One possible option for wholesale cost cutting is closing down one or more sites. Well-written contracts will include mobility clauses that mitigate compulsory redundancies.

If an employer’s place of work changes then it may be possible to simply ask staff to move to a different site by giving them reasonable notice and relying upon the mobility clause in their contract of employment.

If the staff member refuses to move site then this may give good grounds for potentially fairly dismissing them - without the need to pay them a statutory redundancy payment.

Another area for cutbacks is reducing hours of work, particularly when shifts or overtime are concerned. Carefully scrutinise contracts to check that you have the right to change employees’ hours and shift patterns. You may find that some can be put on to short-time working and paid only a minimum daily guarantee payment to reduce salary costs.

Remuneration packages and wage receipts, particularly in large companies, can be a minefield. How you have handled pay increases is critical as they should always be linked to performance and skills to keep costs in line with business growth and also to avoid discrimination claims.

Bonus schemes for exiting employees should also be reviewed to ensure that in times of falling sales and reduced profits there is no room for argument over money.

Deciding which individuals are to go should be determined with incontestable data such as disciplinary record, skills needed in the business going forwards, and some types of attendance records.

When the decision has been reached that redundancies may be a possibility, examine all the other business issues concerning redundant staff. How will it be communicated, how do you protect confidential information, how do you safeguard IT systems, how will it impact on your brand and company reputation?

Consider whether or not, after notice of termination of employment has been given, you will need to place senior or disruptive colleagues on garden leave where they are unable to disrupt client relationships and do not impact on the working atmosphere.

Once this critical business planning stage has been carried out, the process for potentially making roles redundant can be rolled out and consultations with employees or other appropriate representatives can start.

Communication is a vital part of this entire process. You will also need to check that you are consulting with the right people, perhaps including trade union or other elected employee representatives. A detailed written proposal may need to be prepared in advance of starting the actual consultation process.

Depending upon how many roles may be at risk of possible redundancy, consultation may have to last for as much as 90 days before notice of dismissal on grounds of redundancy can safely be issued to staff to be dismissed.

Last, but not least, consider offering outplacement consultancy services to exiting staff. This can sometimes be arranged free to the dismissing employer. This serves two useful purposes. Not only will the business will be seen to be a caring employer but, if staff later bring claims for unfair dismissal, they may have mitigated their losses so that there is little or no compensation for you to pay out.