Legal Obligations and Best Practices for Managing Reduction in Headcount and Missing Money in a Company

Applied case Analysis

Table of Contents
Scenario A: Reduction in Headcount at the Domestic Division......................................................3
Summarise relevant legal obligations or considerations for companies in such a situation........3
Advise about how to manage this process in a way that both complies with the law and
principles of best practice HR......................................................................................................4
Scenario B: Missing Money in the Corporate Division...................................................................4
Summarise relevant legal obligations or considerations for companies in such a situation........4
Advise as to how to manage this process in a way that both complies with the law and
principles of best practice HR......................................................................................................6
REFERENCES................................................................................................................................8

Scenario A: Reduction in Headcount at the Domestic Division
Summarise relevant legal obligations or considerations for companies in such a situation
Redundancy
Redundancy refers to a state where a person is no longer useful for an organization. In
U.K., United Kingdom Labor Law governs the various rights and benefits which are received by
the workers (Bailey and Burch, 2017). Therefore, this law also includes rights of employees on
being dismissed. The facts in this case study meet the criteria as the persons employed have
completed at least one month in the organization.
Legal obligations
(i) The duty to consult arises in a situation when the layoffs have been planned in an organi-
zation.
(ii) The employees are the ones who have to be consulted with and the trade unions should
also be consulted.
(iii) This consultation should take place when the notice has to be given to employees regard-
ing layoffs.
(iv) The content of the consultation should be as follows-
 Briefing regarding the prevailing situation
 The steps which the company needs to take
 The compensation which would be given to the employees who have been selected for
layoffs
 The timing of layoffs
Statutory redundancy pay
It is the lump sum payment which has to be made by the employers to the employee at
the time of layoff. To be eligible for it following are the conditions to be fulfilled in U.K.-
 The employee should be permanent
 The worker should have an experience of at least 2 years
 The employee should have been dismissed
The rates for such payments are-
 1.5 week’s pay for full year of employment after the age of 41
 a week’s pay for full year of employment after the age of 22
 half a week’s pay for full year of employment up to the age of 22