Redundancy policy template for small businesses

We’ve partnered with LHS Solicitors’ Elxtr team to bring you a redundancy policy template - something any business with staff may need at some point.

Why use an elXtr template?

Small businesses have particular legal needs, and elXtr was built with those in mind. They providie legal solutions online for those who don’t have an army of corporate lawyers to call on. We’ve partnered with them to bring you quality legal documentation designed particularly for small business owners.

Redundancy policies for small businesses

Employee redundancy - the termination of employment of members of your staff because you have a reduced need for employees doing a particular kind of work - is an unpleasant but sometimes necessary part of running a business. Some of the essential elements of redundancy law are summarised below.

It’s important to have a redundancy procedure in place so that your employees know what to expect if you have to let some of them go, and so that you can do this without facing accusations of unfair dismissal or discrimination. When the time comes to make the redundancies, it’s also highly advisable to get redundancy paperwork together: to draft a robust termination letter template that includes information like the redundancy termination date and details of redundancy compensation, for example.

Avoiding redundancies

It’s important that your employees know that you will do everything in your power to keep them on where possible. Your redundancy policy should list all the steps you will take to reduce costs and avoid redundancies where possible. From the concrete, such as reducing overtime and restricting recruitment, to the more nebulous, such as a promise to explore all other options before beginning to make redundancies, having strategies in place to avoid redundancies will reassure your staff and give you a roadmap if your business goes off course.

In addition, before making any employee redundant you must consider suitable alternative vacancies – otherwise the redundancy dismissal will be unfair in the eyes of the law and could leave you open to legal action. And if you offer an alternative position, you must allow them a trial period in that position.

Selection, consultation and voluntary redundancy

Of course, even if you do all you can to avoid redundancies, you may still find that you have to let go of some of your staff. Your redundancy policy should use clear criteria to outline how you will go about selecting the potential candidates for redundancy, and inform them of how the consultation process for those provisionally selected will unfold.

You may find that there are those who wish to take voluntary redundancy, and it’s helpful to have a section in your policy that explains how those who wish to volunteer for redundancy should go about doing so.

Redundancy payment

Statutory redundancy pay is a legal requirement for employees who have been with you for two years or more (though you are free to pay more than the minimum required). An outline of how your redundancy package will be calculated (for anyone who is eligible) should be included in your redundancy policy.

Implementation

Your redundancy policy could be made available as part of an employee handbook, or over your company’s intranet, but employees should know how to find it if they need to. You can download our redundancy policy template, which you may then amend to suit your business. If you are unsure about edits, consult your legal council or the Citizens Advice Bureau.

Click here to download our redundancy policy template for free

Redundancy policy - free Word document for download

If you would like to make changes and don’t have Adobe Acrobat, you can also download our redundancy policy sample in Word format.

This document has been produced by LHS so we can’t take responsibility for its contents. We’d recommend you take professional advice before making any important decisions based on its contents

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