Redundancy Process & Guidance

If your business is in a redundancy situation it is important to have a clear and defined redundancy processes that employees have access to and is followed appropriately. Before implementing the redundancy, process consider the following guidance.

Reasons for Redundancy

You may need to make redundancies for a variety of reasons and it is important to understand and define these reasons, which could include:

  • You have ceased (or intend to cease) carrying on the business for the purposes of which you employ someone.
  • You have ceased (or intend to cease) to carry on the business in the location you employ someone.
  • You don’t require your employees to carry out work of a particular kind anymore.
  • You don’t require your employees to carry out work of a particular kind in a specific location anymore.

Redundancy can be voluntary or compulsory

Consider Alternatives to Redundancy

Alternatives to redundancies could be:

  • Reducing or ending overtime
  • Stop recruiting and retrain at risk staff
  • Stop using contractors/casual staff/agency workers
  • Offering flexible working
  • Offering voluntary redundancy
  • Temporarily lay off employees
  • Temporarily place employees on short-time working
  • Changing your staff employment contracts

As with any change to an employee’s terms and conditions double check what your contracts of employment, employee handbook or HR processes say and adhere to them

Talk to Your Line Managers / Supervisors

By talking to your line managers and supervisors letting them know what is happening can help you to manage the redundancy process. Managers and supervisors tend to know their staff well and can be better informed to support employees affected by redundancy. Don’t forget that your managers and supervisors may require additional training on managing redundancies as well as additional support throughout the process. They should also be involved from the beginning and be kept up to date throughout the redundancy process.

Redundancy Process

Step 1 – Announce the Potential Redundancies & Start of Consultation

Let the affected staff know about the “potential redundancies” and that a period of consultation will start. Explain why there is may be a need for redundancy and what alternatives you are exploring to prevent this.

Explain that you are starting a consultation period with affected staff and you welcome their input into how to prevent the need for redundancies.

The consultation period is usually at least one month and you should meet with affected staff at least once in that period.

Write to all staff that may be affected confirming the information mentioned above.

Step 2 – Holding a Consultation Meetings

You are legally required to have at least one “meaningful individual consultation” with all affected employees. It is good practice to have the 1st meeting near the start of the process and the next meeting 2 weeks after. These meetings should be kept private and not be interrupted. It is useful to have a note taker, maybe a glass of water and some tissues.

These meetings can be challenging so prepare as much as possible before each meeting. Meet each employee privately, at least once and listen to their concerns and suggestions. You should keep notes of these meetings.

Things to consider discussing in the consultation meetings;

  • Confirm the potential redundancy and the reasons for it
  • Explain what you are trying to do to avoid the redundancy
  • Explain any applicable selection criteria (see step 3 below)
  • Let employees know if voluntary redundancy is an option, if it is have the details of notice and pay available for the employee.

Listen to the employee’s ideas and suggestions to prevent the potential redundancy. Arrange the next meeting and confirm all of the above in writing to the employee as soon as possible after the meeting.

Step 3 – Select Staff

The potential redundancy may mean that there is a “pool” of staff that are at risk of redundancy, this could be a whole department or individual roles across the organisation.

Selection Criteria – Once you have identify the pool of staff you should fairly and objectively select for redundancy. It is good practise to have at least 3 criteria which are relevant to the staff being selected. Do not include anything that is likely to discriminate against an employee – absences, attendance, disability, pregnancy or maternity.

You can use interviews to help you select the most appropriate employees for redundancy but be aware that interviews are not always subjective, and you can be influenced about how you feel about a person. If you do have interviews, keep notes and be objective.

Step 4 – Formal Dismissal, Notice & Pay

It is best practice to dismiss within a formal dismissal meeting, once the appropriate consultations have taken place. Notes should be kept of this meeting.

Details of the meeting should be confirmed in writing including date dismissal was given, notice period and date the employment ends and include details of your appeal processes (please see step 5 below)

Dismissal Notice – Notice starts on the first full day after the employee receives the notice. Notice periods need to be whichever is the longer of the following;

  • what’s in the employee’s contract, or
  • their minimum statutory entitlement

The statutory minimums are:

  • One week if the employee has been continuously employed for one month or more, but less than two years.
  • One week for each year of employment (up to a maximum of 12 weeks) if the employee has been continuously employed for two years or more.

Statutory Notice Pay – All employees must receive at least the statutory level of notice. If your contract sets notice at the statutory level, you will be legally required to pay employees for their full weekly pay (if they have normal working hours) or an average if they have irregular working hours or pay.

If any of your employees are as follows, then you will need to make sure they still receive their normal week’s pay:

  • Incapable of work because of sickness or injury;
  • Absent from work wholly or partly because of pregnancy, childbirth, maternity leave, paternity leave or adoption leave;
  • Absent from work to take holidays

Arrange Redundancy Pay – If you have no contractually-enhanced redundancy pay arrangements, all your employees with at least two years’ continuous employment get a statutory redundancy pay entitlement of:

  • 0.5 week’s pay for each full year they were under 22
  • 1 week’s pay for each full year they were 22 or older, but under 41
  • 1.5 week’s pay for each full year they were 41 or older

Redundancy pay under £30,000 is not taxable and is something an employee receives in addition to any other payments such as notice and outstanding annual leave etc.

When confirming the discussion in writing include a written statement showing how you have calculated their individual entitlement and should make it very clear how much they will be getting – and when they can expect to receive it.

Step 5 – Appeal

When confirming the redundancy to the employee (step 4 above) include within the letter reference to your existing appeal processes, if you do not have one include the following;

  • That a written appeal should be submitted within five days of receipt of notice.
  • It should detail the grounds for the appeal.

Upon receipt of the written appeal you should then write to the employee arranging a meeting to discuss the appeal and confirming a suitable time and place, also inform them that they are allowed to bring a work colleague or union representative.

Arrange for a senior staff member – or someone who has not been involved in the decision making to conduct the appeal meeting.

Consider the matters raised as part of the appeal, then make a decision to either refuse or uphold the appeal.

Refuse Appeal – the redundancy dismissal, pay and notice you have issued continues as originally proposed.

Uphold Appeal – if the employee has not yet ended their redundancy notice period, the employment contract will normally continue as though the employee had not been selected for redundancy. If you have made a redundancy payment to your employee you should make it clear that the payment is to be returned.

Time Off to Look For Work & Training – Employees who are in their notice period and have had at least two years’ continuous employment have a right to reasonable time off to look for work or make arrangements for training and includes:

  • Visiting recruitment agencies.
  • Attending job interviews.
  • Getting help writing CV’s and job applications
  • Events linked to college, university or apprenticeship enrolment.

You are only statutorily required to pay a maximum amount that is equal to two fifths of one week’s pay during the entire notice period.

We hope you found this article useful. If you would like more guidance on your redundancy process  or any other HR issue, please get in contact with us here

ACAS and Direct Gov are also a great resource

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