Evolve to succeed expert roundtable
The current environment now means that companies are looking at the structure of their workforces in order to adapt these to reflect their changing circumstances. The members of our Workforce Transitions Services team outline their thoughts on how companies can embark on such a programme within their organisations.
Outlining their thoughts are -
Mark O'Donnell, Director, Human Capital
Wendy Doyle, Manager, Employment Law
Sarah Connellan, Director, Tax & Legal Services
Ian Mitchell, Managing Director, Deloitte Pensions & Investments Limited
1. More and more often we are seeing redundancy announcements. From working with companies implementing redundancies, what are the most important considerations before reaching this decision?
Wendy Doyle: An employer should ensure a specific plan/ timetable of events is in place prior to any redundancy announcement and also look at the alternatives to redundancy such as layoff, short-time, reduction in working hours in addition to where there is suitable alternative employment available for the employee.
Sarah Connellan: After all other alternatives to redundancy have been considered, the organisation should ensure that they are reducing their workforce by adequate numbers to allow them to safeguard and secure their business in the future. The implementation of a redundancy programme sows a seed of doubt and insecurity with all employees of the organisation. Organisations should ensure that they do not need to embark on a second redundancy programme within a short period of time, which would instil a lack of confidence in the organisation's future prospects.
Ian Mitchell: Prior to reaching a decision to initiate a redundancy programme, employers should examine all aspects of their business to evaluate opportunities for potential cost savings. Pensions are one area where employers can reduce costs through restructuring of pension schemes, executive 'carve-outs' and early retirements. Such alternatives should be considered to limit the negative implications associated with any redundancy programme.
2. What are the elements that make for an effective redundancy programme – within each of your respective areas?
Wendy Doyle: The first step for any company considering reducing its workforce is to address the legal issues such as whether any proposed redundancies fall within the definition of 'collective redundancies' under the Protection of Employment Acts 1977 to 2007. If this is the case, specific information and consultation obligations will arise. Notification to the Minister for Enterprise, Trade and Employment is also required. Employers should also ensure any selection procedure is fair and transparent and proper notice of redundancy is given to affected employees.
Sarah Connellan: The make-up of the severance package and the delivery of same in a tax efficient manner are key to the effective delivery of a redundancy programme. Non contractual termination payments may be subject to various tax exemptions and reliefs and do not affect employer's PRSI. Contractual termination payments would attract employer's PRSI and would be fully liable to PAYE/PRSI and levies, in the hands of the departing employee.
Mark O'Donnell: From a HR viewpoint the key element is communication. This cannot be overstated. The message as to why the redundancy is happening is very important but perhaps more important is how that message is delivered and that the message is consistent. The other key element is outplacement. This provides practical and emotional support to departing employees.
Ian Mitchell: Once a decision has been taken to affect a redundancy programme and the company's employee benefits package includes an occupational pension scheme, pension issues will need to be addressed. It is vital that employers research this area thoroughly to ensure that they are in receipt of all relevant information prior to making any decisions regarding employees' individual redundancy packages - and that they communicate this information to them in a way that they will understand. It is also important to have dialogue with employees at the start of and for the duration of the process to prevent any false information being circulated among staff members.
3. This is a very sensitive time for everybody involved in the company. How do you work with clients to ensure that the process is as smooth as possible?
Wendy Doyle: The first thing we do is assist clients in planning the process, this cannot be overstated - planning is the key to a successful programme. We then assist clients in all aspects of the programme - we either provide that advice while on site or we provide advice remotely. We help our clients ensure that the process is fully compliant and run in accordance with best practice. We ensure that clients are not exposed and employees are treated fairly.
Sarah Connellan: Psychological and practical assistance provided to employees will instil a confidence in all employees in the organisation. Such assistance might include group tax briefings, preparation of individual tax calculations, one to one meetings with departing employees to discuss tax and pension implications, and the provision of outplacement service to departing employees. We walk the path with our clients to ensure that the programme is implemented as smoothly as possible and that departing employees are looked after as much as possible.
Ian Mitchell: A clear project plan is required to outline all steps involved in the process. However, this may need revision regularly throughout the programme. We work with our clients to anticipate and seek to overcome any challenges they face while planning and affecting a redundancy programme. We help them analyse their pension plans both prior to the start of the process through to completion so that any changes to be made can be done so in a timely manner while being mindful of the personnel issues involved. Communication and negotiation with trustees, employees and any unions which represent employees forms an integral part of this process.
4. You each work with clients in specific areas – if there was one piece of advice that you could emphasis to companies implementing a change in the structure of their workforce what would that be?
Wendy Doyle: There are a number of legal issues to consider in any workforce restructuring. However if an employer is considering redundancies, I would advise them to ensure that any selection procedure in place is clear and transparent and does not fall foul of the nine grounds prohibited under the Employment Equality Acts 1998 to 2004 namely age, gender, race, religion, disability, marital status, family status, sexual orientation and membership of the travelling community.
Sarah Connellan: Plan, Plan, Plan and Communicate, Communicate, Communicate.
Mark O'Donnell: My advice is to put yourself in the departing employees' shoes - this will ensure you run the programme as best you can.
Ian Mitchell: Be upfront with your employees from the start and maintain communications throughout. It is vital to remember that pension benefits comprise an important element of an employee's benefits package, particularly in today's challenging markets. It is therefore crucial that any change to a pension scheme structure is carefully and sensitively treated in order to ensure that staff morale is kept intact and in the course of doing so, a healthy business image maintained. Ultimately, it is worth bearing in mind that the level of future success may be reflected by the level of success of the transition.