Making an employee redundant can be very difficult, for everyone involved. Whatever the reason for your decision, it’s important you’re clear on what’s happening from the start. We’ve teamed up with Farillio, the small business legal support specialists, to give you access to a practical action plan, including a series of redundancy letter templates, to help you handle the process.
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Before making staff redundant, it’s important to check any alternative options. For example, could you consider reducing your employee’s hours if you’re going through a temporary work shortage?
If you’ve considered all of your other options and you can’t find a way to keep your employee, it’s likely you’ll need to make a redundancy.
Following the correct process is crucial when making a redundancy.
The guidance below gives you the tools you need, from a redundancy letter and other support materials to a redundancy pay calculator and legal redundancy advice, helping you make the process as smooth as possible.
Alongside this support, we strongly recommend you get expert legal guidance when making a redundancy. This will help you avoid mistakes that could cause an unfair dismissal claim, or other difficulties.
Length of service and the number of employees you’re making redundant are important factors to bear in mind.
If your employee has been with you for less than two years, you don’t need to go through the full redundancy process. Instead, you can give them notice using the normal terms of their contract.
However, it’s important that you follow a compliant, fair dismissal procedure. Use your redundancy policy to make sure you’re getting the basic principle right, as well as any employment contract terms that might apply.
If you’ve gone ahead and checked other options for keeping your affected employee (or employees), and you’re confident the redundancy decision is valid, you’ll need to give them formal notification with an at-risk of redundancy letter (see below).
For the rest of this guide, we’ll assume you’ve checked all your alternative options and decided to go ahead with the redundancy.
If it’s 20 or more people you’re dismissing, you’ll also need to go through a ‘collective consultation’ process, alongside the usual proceedings for individual employees. This gives staff one to two weeks to elect representatives who’ll consult with the company manager(s) on their behalf.
These representatives have the right to paid time off to complete these duties, and have protection from dismissal or other harmful treatment, but no extra pay.
Need to invite staff to elect representatives? Use the invitation template to get started, and the nomination notice. You’ll need to make this available to your employees, so they can choose their representatives.
Getting expert legal advice is crucial, especially when you’re making 20 or more people redundant. You may already be taking advice if this is part of a wider business restructure.
Where possible, try to have a conversation with your employee(s), before they receive their letter. Explaining things clearly, and the process you’re going to follow, will usually come best from you, and shows your employee that you’re determined to be fair and approachable.
It also gives you both an important opportunity to try to find an alternative solution.
See Have a conversation first below.
If you’re losing fewer than 20 employees, your redundancy consultation could be done in a matter of weeks. However, it’s really important that you take the time you and your employees need, avoiding the pain of any future claims.
For redundancies of 20 or more people, the collective consultation period must legally last 30 days for 20-99 employees or 45 days if it’s 100 or more.
You’ll need some or all of these templates and tools when making a redundancy. Check through the list, read over each template and get to know the communications you’ll be working with.
If your redundancy policy is in place, your next step will be the at-risk of redundancy letter template, to move the redundancy process forward.
When is an employee at-risk of redundancy? An employee is at-risk when they’re placed under warning of redundancy, for example if their role isn’t needed or affordable for the business. ‘At-risk’ doesn’t mean they’ll definitely be made redundant, however, and you should consider re-deploying them instead, where possible.
Your at-risk employee group should receive this letter before you begin any individual consultations.
Ideally, before you send any letters you’ll have a chat with your employees first, so that the news comes from you. The start-to-finish process is likely to be less stressful, for you and your employees, if your people can see you behaving in a human, approachable way.
The at-risk of redundancy letter and your conversation with employees needs to make clear:
The at-risk of redundancy letter template prompts you to explain clearly to your staff why the company is in this situation, and this will be key to an easier process.
Legal advice is recommended when drafting this letter. It’s impossible to predict how every employee will react, and having an expert to hand can reassure you that what’s happening is normal (or not), and how to respond.
Use the template as a guide here, as it’s a critical point to make clear to your employees. You’ll need to show you’ve considered as many of these alternatives as possible:
You can invite people to put themselves forward for voluntary redundancy or early retirement. If you decide to do this, you’ll need to make it an option for everyone who’s at-risk, rather than individual employees.
Your letter will also need to set out which ‘pool’ or group(s) of employees is at highest risk of redundancy.
Making staff redundant in a small business? In this case, all staff might be at-risk.
You’ll need to apply ‘fair and quantifiable’ criteria, when deciding who will be at-risk of redundancy selection. This must be impartial, with good records kept alongside it, showing your assessment process.
If dealing with a trade union, you’ll need to work with them on your criteria, but you’ll usually base your decision on things like:
It’s legally unfair to identify someone for redundancy using any of these criteria:
Remember, you may need to have more than one conversation with your employee about their redundancy, before any final dismissal takes place. Use the redundancy letter templates (plus other essential materials) list above to plan and structure these.
From the employee representative letter below to the redundancy notice letter template, we’ve added a bit more detail on the redundancy letter templates and materials you might need.
Be sure to check the full Redundancy letter templates and materials list too (see above), for support templates.
You only need to use this letter if you think you’ll be letting 20 or more people go (in a collective redundancy). Skip this step if it doesn’t apply to you.
You’ll prepare and send this letter once you’ve reached your final decision to terminate your employee’s contract, making them redundant.
This is the final letter you’ll send, unless your employee decides to appeal.
If an employee decides to appeal any decision made as part of the redundancy process, you’ll need to use this letter.
Your invitation will explain the redundancy appeal hearing process, and you can attach any documentation you think appropriate (usually material which justifies your decision).
Make sure you’re giving a clear picture of the process to date, explaining all the steps you’ve taken, and what happens in a redundancy appeal hearing, so they’re prepared.
This letter confirms your final decision, after the redundancy meeting has taken place.
Along with a consultation and appeal process, your employees will be entitled to other redundancy rights, including:
Your employees may also be entitled to a contractual redundancy payment (in addition to the statutory payment), so you should also check their employment contracts for this. Even if they don’t have a contractual right to a top-up payment, you may choose to make one if you feel it’s appropriate.
Statutory minimum notice entitlements will vary, depending on how long the employee has worked for you:
You should also refer to any notice periods in your employee(s)’ contracts, which may mean they’re entitled to a longer notice period (or payment in lieu of their notice period).
There may be a clause in your employee’s contract which allows them to take payment instead of the notice period. If so, they can leave their role earlier, with this payment.
If your employee disagrees with your decision to make them redundant, they can appeal. They should attend any appeal hearing with their representative, employer and a note-taker, and can challenge your decision.
The attached documents were produced by Farillio 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.
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