Entering into a redundancy consultation can be a difficult, but sometimes necessary, decision for any business to make.
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Simply Business has teamed up with Clarkslegal LLP to offer user-friendly legal documents that you can customise depending on the needs of your business. The documents below, as well as our step-by-step guide, are designed to help you navigate the legal process of redundancy.
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Why use a Clarkslegal template?
If, like most small businesses, you don’t have an army of corporate lawyers behind you, professional legal options for situations like redundancy may seem out of reach. That’s why we’ve partnered with commercial law firm Clarkslegal to bring you professional legal document templates. They’re helpfully designed with the particular needs of small businesses in mind.
Redundancy notices: where to start
Before you make the decision to go down the redundancy route, consider whether there are other ways to manage cost cutting or make your business more efficient.
Have you exhausted all possible options for avoiding compulsory redundancies? For example, you could:
- Offer voluntary redundancy or early retirement
- Offer flexible working
- Let freelancers and contractors go
- Place a ban on overtime
If you find that redundancy is the only option, it’s important to set out a clearly defined procedure. The number of employees at risk will affect the process you follow.
Are you dealing with pooled or unique redundancy?
Depending on the size of your business, team, or department facing a reduction in workforce, redundancy may be ‘pooled’ or ‘unique’.
In pooled redundancy cases, businesses identify a group, or ‘pool’, of roles from which to select individual candidates for redundancy.
In the case of smaller businesses, the redundancy may well only impact one particular role. If the role is unique, meaning there are no other employees who do the same or a similar role in terms of duties, responsibilities, skills and status, it may not be appropriate to pool the role with others.
You’ll find templates for both scenarios at each step below.
Step 1. Let your employees know you’re planning to make redundancies
First, explain the situation to your affected employees by holding a meeting and following up in writing. You should present redundancy as a possibility only at this stage, and you should highlight any alternatives to redundancy that have been explored, along with why these options aren’t viable.
This may only apply to a certain department or team, or it may affect your whole business. The meeting and follow up letter should include information such as:
- The number of roles being considered for redundancy
- The reason your business needs to take this action
- Details of the redundancy selection process and the selection criteria
- An invitation to comment or ask questions
You can use this pooled initial redundancy letter template to let your affected employees know your plans.
We’ve also provided a redundancy selection criteria template, so you can score those employees from highest to lowest.
Criteria should be objective and based on skills, qualifications, performance, and attendance. They shouldn’t be based on subjective criteria or anything discriminatory, such as pregnancy, age, parental leave, being a part-time worker, or pay and working hours.
Criteria like these would be considered unfair in the event of an unfair dismissal case being brought against you.
You can use this unique initial redundancy letter template if only one person works in the role (or roles) your company no longer needs. You won’t need a selection criteria template in this case.
Step 2. Confirm which employees have been selected
This step differs slightly depending on whether you’re dealing with a pooled or unique redundancy case.
Once you’ve completed redundancy selection criteria templates to determine the lowest and highest scoring employees in the pool, write to those employees to let them know where they stand.
Employees at risk of redundancy
The letter to at risk employees should provide:
- A list of any available internal vacancies the employee may consider applying for
- Details of redundancy pay
- The time and place of the consultation meeting
You should enclose the employee’s selection criteria matrix showing their score.
Employees no longer at risk of redundancy
The letter to provisionally safe employees should explain that they are not currently at risk of redundancy. But it should be made clear within the letter that the employee is only provisionally safe from redundancy.
Those deemed at risk of redundancy have the right to challenge the decision.
Write to the affected employee(s) with an invitation to a redundancy consultation meeting. This template can be used for the first and any subsequent consultation meetings. There’s a different template for the final meeting, which you’ll find in step four.
Step 3. Hold consultation meetings
Once you’ve written to each affected employee to tell them whether their job is at risk, the next step is to hold redundancy consultation meetings.
Working out what to say in the meeting may seem like a daunting task. The good news is that Clarkslegal have created two helpful templates: a script for the first unique redundancy consultation meeting and a script for the first pooled redundancy consultation meeting.
The scripts include important details such as:
- A final opportunity for the employee to invite a work colleague along to their meeting
- A reminder of the roles and number of employees at risk
- A reminder of the reasons for the decision to make redundancies
- An opportunity for the employee to comment on the decision to make them redundant
Step 4. Communicate the outcome of the first consultation meeting
This part of the process varies depending on whether the redundancy is pooled or unique.
The number of consultation meetings with the employee will vary depending on what is discussed. If the employee accepts that there are no alternatives to redundancy and has nothing to add, the second consultation meeting may be the final one. However, in many cases you’ll need further consultations to properly consider alternative roles and suggestions made by the employee.
When you’re ready to hold the final consultation, you can invite the employee to the meeting using this final consultation letter template.
You’ll need to write a letter to each employee with the outcome of their consultation meeting. The letter should give the employee a further opportunity to challenge the scores you gave them on the selection criteria template.
If the employee decides to formally challenge their scores, you’ll need to carry out a formal review and write a letter to the employee with the outcome of the scoring review. It should state whether there has been any adjustment of the scores, and whether the employee is still at risk of redundancy.
For employees still at risk of redundancy, you’ll need to write a letter with details of a further consultation meeting. You’ll need to use a different letter template for the final consultation meeting.
Note that if the employee’s scores have been adjusted and they are no longer at risk of redundancy, they won’t be safe from redundancy until the whole process has been completed for each employee, including those initially deemed provisionally safe from redundancy in step two.
Step 5. Confirm dismissal for redundancy
Once the consultation process has been concluded, the next step is to confirm redundancy, in writing, to those employees selected for dismissal. You should include the following in the dismissal letter:
- Reasons why any suggestions the employee has made to avoid redundancy are not practicable
- Whether the employee will be required to work during their notice period
- Details of gardening leave, which shouldn’t be excessive, if applicable
- Details of payment in lieu of notice, if applicable
- Details of the settlement agreement, if applicable
- Details on how to appeal and the appeals deadline
At this point, you’ll send the final consultation letter to that individual at risk of redundancy.
Step 6. Arrange redundancy appeal meetings
If an employee chooses to make a redundancy appeal, you’ll need to write to them with details of the time and place of their appeal meeting. You can use our unique redundancy appeal meeting letter or our pooled redundancy appeal meeting letter.
You’ll then need to communicate to the employee the outcome of that appeal. This may be a termination of employment letter, or it may be a letter about the reversal of the decision to make the employee redundant.
Step 7. Write to provisionally safe employees
Finally – don’t forget to send a letter to the provisionally safe employees who are waiting to find out that the risk of redundancy has passed.
Minimise the negative impact of redundancy on your business
If you find yourself having to deal with redundancy, be prepared.
It’s important to research your rights and responsibilities as an employer. Don’t wait until you’re in the position where you have to lay off one or more of your employees.
Establish your redundancy policy now, so you and your staff know where you stand if the occasion ever arises. This will help to avoid potential cases of unfair dismissal being brought against you. Why not start today? Our downloadable templates are customisable to your business needs.
For more information on making employees redundant, visit gov.uk.
The attached documents were produced by Clarkslegal so we can’t take responsibility for their contents. We’d recommend you take professional advice before making any important decisions based on their contents.