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At the end of this chapter, learners should be able to:

• Explain what redundancy is.

• Understand how to manage redundancy.

• Calculate redundancy pay.

• Understand the support available for surviving employees.

Explain what redundancy is.

Understand how to manage redundancy.

Calculate redundancy pay.

Understand the support available for surviving employees.

The impact of the threat of redundancy on teachers in Northern Ireland is examined. The problems of anger, anxiety and confusion which form part of the general impact of redundancy on teachers are highlighted. Redundancy is shown to have a particular impact on young teachers who are rarely able to build up sufficient job security to protect them from the redundancy process. It is suggested that there is a general acceptance by teachers of managerial arguments concerning the need for redundancies, and considerable criticism is expressed of the role played by trade unions. Anxiety is also expressed about the role of school principals in the redundancy process. The lack of managerial skills is also highlighted.

The purpose of this paper is to identify and explain key training needs regarding redundancy handling which is increasingly affecting people, often for the first time

The authors use their background in the employee relations area to identify and explain key skills that are involved in redundancy handling. While knowledge of relevant law is part of what is required, it is only one aspect. Managers can suddenly find that they are thrust into a complicated conflict situation, in a deteriorating workplace atmosphere when they may also be unsure about their own job security.

Staff surpluses do not automatically mean redundancy. Options can include re‐deployment, short‐time working, temporary lay‐offs and temporary closure and pay cuts. However, in these situations, as with redundancy, managers may find that the situation may be very stressful. This may be aggravated by a collapse in morale combined with a need to maintain a reduced level of production and/or services. Policies of multi‐skilling may both help avoid redundancy in the first place and failing that help with the re‐deployment of surplus staff. Training and development may also have a crucial role in helping an organisation adapt to the circumstances that caused a staff surplus. Adaptation is likely to need to include the positive management of redundancy survivors.

There are two main features of the paper – it explains the key issues in redundancy handling for people who may be unexpectedly involved in it – which is increasingly likely; it also focuses on the training issues – especially for those having to implement redundancy.

To determine the relationship among covariates used in financial distress studies.

The study selects four specific bankruptcy studies and employs canonical correlation analysis to determine the relationship among the different variable sets that these studies used as predictors of financial distress. Canonical correlation analysis identifies the relationship and provides an indication of the amount of redundancy that exists between two variable sets. The four studies are representative of the genre, similar as to choice of statistical technique, and frequently cited by researchers.

The research findings indicate that the relationships between the alternative variable sets are very weak and alternative variable sets do not represent similar financial relationships. Redundancy coefficients suggest that, if one variable set is redundant to another variable set, it is because the redundant variable set, is much smaller than the predictor variable set.

The results suggest that there is not much similarity among the variable sets used in financial distress studies; to the extent that there is any similarity, it is due to variables common to each set or one variable set being larger than the other variable set. Ad hoc variable selection in financial distress studies results in the use of alternative variable sets containing heterogeneous variables unrelated to one another.

A common criticism of financial distress research is that a theory of corporate failure does not exist. Variable selection is not prompted by economic theory but is based upon suggestions in the literature, the success of variables in earlier studies, or the selection of a large set of variables with an accompanying data reduction procedure. Despite nearly 30 years of research in the area, the absence of an inter‐correlational structure among alternative variable sets highlights the atheoretical nature of financial distress research.

Many academics in the area of personnel management and industrial relations tend to take the problems that they are dealing with as given. This may not be too much of a problem when highly trained and perhaps overtly scholastic academics and their associates (eg econometricians and manpower planners) are currently providing the dominant framework in which many of these problems are to be tackled. But what is alarming is the increasing tendency to begin with the solution to the problem and then proceed to justify this as the answer to the problem with little or no analysis of its nature.

In a recent paper, Hartley and Cooper reviewed the available studies of redundancy using a psychological framework and came to the conclusion that insufficient systematic work had so far been done ‘to assess the impact of the phenomenon on the psychological state of the redundant worker, his family and the wider community’. This lack of examination of redundancy from a psychological approach was a state which Hartley and Cooper felt should be remedied. And, in the title of their paper, they pose an implicit question by the inclusion of a question mark — ‘Redundancy: a psychological problem?’. Yet, as Wood notes, there is in fact little specification of either the potential or reported psychological effects of redundancy. Hartley and Cooper document the reported impact of redundancy in terms of the various stages of the process and note that most studies have tended to concentrate on the period of unemployment following the loss of the job rather than on the period previous to the redundancy. A number of these studies, they note, have been attitudinal, describing the feelings of the affected population, or a sub‐sample, towards a number of relevant issues, most notably the redundancy itself. While they consider that the issue of redundancy has been studied from the viewpoints of both labour economics and sociology, Hartley and Cooper are more concerned to highlight the lack of concern displayed so far by psychologists. They quote the study of the closure of a steel works by Warr and Lovatt, in which psychological wellbeing was singled out for examination and was found to be associated with length of time unemployed. This study is, however, exceptional in the emphasis placed on the psychological effects of redundancy. Hartley and Cooper go on to comment on the central place given in previous studies to the job search process, both in terms of attitudes and behavioural patterns. From job search, attention is directed to a review of the studies of the unemployed in general as opposed to the redundant in particular. Attention is drawn throughout the paper to the lack of concern shown to date with the examination of redundancy as a psychological problem.

Voluntary redundancy (VR) has become a widespread phenomenon in British industrial relations. Combined with redundancy payments it has removed obstacles to industrial restructuring. Traditionally it has been classed as compulsory or voluntary. This obscures the complexity of redundancy and provides no guidelines for analysis. A conceptual development is needed which will enable an investigation of the full range of variables attached to the redundancy process. Characteristics of VR are outlined and its advantages and disadvantages to employers, employees, trade unions and the public interest. For society, VR encourages job losses at a time when more, rather than less, employment is needed. It also encourages increased productivity through flexible working and job demanning. A trade‐off between these competing policies is possible. At present VR presents itself as a form of alliance between employees and employers pursuing mutually consistent private interests. This tension between private interests and wider public interest is obvious. A recognition that redundancies ought to be put to a test of the public good is required.

The 1965 Redundancy Payments Act was amended by the 1975 Employment Protection Act to give substantial rights to trade unions to challenge managerial decisions on redundancies. These included advance warning of impending redundancies, the right to make representations to the employer, and to receive the employer′s reply. Cabinet ministers, introducing the legislation, felt that it would generate negotiations either to quash the redundancies or to provide alternative solutions to impending job losses. In investigating 74 incidences of redundancy, covering 10,500 workers, it was found that these rights have, for the most part, merely oiled the process of managerial decisions over redundancies, by enjoining trade unions to such decisions; decisions on which they have no real impact. Rights for trade unions, then, in practice translate to gains for employers. An important caveat to this situation occurs where an agreement on redundancies exists, generally giving workers substantial benefits, although there are still too many trade union officials and employers who do not wish to sign such agreements.

The original legislation which introduced the redundancy payments scheme was the Redundancy Payments Act 1965. This was the first of the substantive statutory individual employment rights given to an employee; other individual employment rights, as for example, the right not to be unfairly dismissed, followed some years later. The Redundancy Payments Act 1965 has been repealed and the provisions on redundancy are now to be found in the Employment Protection (Consolidation) Act 1978.

Examines the concerns of survivors who remain in organizations following redundancies. Categorizes the issues which arise from these concerns and uncertainties into three categories: issues which arise following notification of forthcoming redundancies; issues arising from the notification of those affected; and issues following notification and termination of contract. Based on in‐depth interviews with senior human resource practitioners in 40 organizations, utilizes organizational practices and learning to explore the management of these issues. Recognizes the relationship between choice of redundancy strategy and the nature of the issues which arise. Argues that while organizations may be concerned with the needs of redundant staff, this will be insufficient to address the concerns and uncertainties of survivors. Also evaluates organizational practices aimed at building survivors′ commitment in the longer term. Argues that while organizations are attempting to recast their culture and their employment relationships, there is still much which could be done to recognize post‐redundancy issues from the perspective of the individual survivor.