How to approach redundancy as a small or medium business

Making somebody redundant is one of the hardest things – if not, the hardest thing – you’ll ever have to do as an employer. As experienced HR consultants, we’re here to provide you with the essential guidance, advice and support you need to make the redundancy process as stress-free as possible for all those involved. After all, you need to approach redundancy correctly, for the sake of your team, your business and you. 

Without professional guidance, you might unintentionally do something to harm your team and business, especially if this is your first redundancy. With our support, we will help you approach redundancy fairly while keeping in line with the law, given our extensive experience.

What is redundancy?

Redundancy is when an employer ‘lets someone go, either because they need to reduce headcount, or the role no longer exists’ from their company because there’s no longer a business need for the work that person is doing. It’s important that you recognise that making somebody redundant is very different to ‘firing’ a person. When you fire somebody it implies that that person has done something wrong, however, when you’re making somebody redundant it’s because their role is no longer required for whatever business reason. 

Are you sure this is the right thing for your business?

Before you start the redundancy process, it’s important that you are certain that you’re doing the right thing for your business. If you feel it is the right thing to do, you should look at creating a clear business rationale identifying the reason for redundancy, before making any redundancies. 

At NESE HR, as specialists, we will be able to help you establish whether you have the legal right to make a role redundant or not. This way, you’ll have total peace of mind that you’re making the right decision. 

It’s important to acknowledge that if there is more than one person in a role, but you only want to make one person redundant, the decision around who you choose needs to be a fair one. For example, the criteria for making somebody redundant would include the likes of:

  • The employee’s skills or qualifications
  • Their previous performance
  • Their attendance, if not disability related or associated with the Equality Act
  • Any disciplinary record
  • Their length of time at your business

Likewise, you can’t make a person redundant based on any of the following:

  • They are pregnant
  • They are using statutory or contractual parental leave
  • They have joined a trade union
  • You cannot discriminate against their age, disability, gender, their religious beliefs or marital status, or any other Protected Characteristic under the Equality Act 2010. 

The redundancy process

For best practice and for the benefit of your employees’ wellbeing, as well as your business reputation, we would thoroughly advise you to carry out a redundancy consultation process. If you don’t do this, it could result in your business being taken to a tribunal, which could decide that you have dismissed employees unfairly for failing to consult appropriately. 

If you are planning on making more than 20 people redundant (which may be unlikely), then you will need to do a collective consultation with a person representing a group of individuals If this sounds familiar, we can advise you on this process. 

You should notify your employees that you are entering a redundancy consultation. This means telling your employees that redundancies are expected, including:

  • The reasons for the redundancies
  • The number of redundancies expected
  • How you plan to select those redundancies
  • How the process will be carried out
  • How you will work out redundancy pay


Meeting each individual at risk

You should then hold three meetings with each employee at risk of redundancy where practically possible, and dependant on the above. These meetings should take place witihn a reasonable timeframe. 

  • The first meeting is used to tell the individual they are at risk of redundancy, including the reasons why, and advising them of the process.
  • The second meeting should give the employee an opportunity to suggest alternatives to redundancy for your consideration. These alternatives need to be considered by the business. 
  • The final meeting – if there is no suitable alternative to redundancy – then this should be confirmed in writing. The employee should be advised that they can appeal against the decision if they wish in line with the statutory process.


The redundancy letter

Following the final meeting, you should write a redundancy letter confirming your decision. This letter should include:

  • How much notice is to be given. This will depend on how long that person has been employed for and what’s in the contract of employment. 
  • Details of any redundancy pay (notice pay and statutory redundancy pay).
  • The right of appeal and details. 

Do you need professional HR advice? 

Going through a redundancy process should not be underestimated, it’s complex! 

If you are a small/medium, or even a large business and you’re thinking about making somebody redundant, then you should get in touch with the professional experts at NESE HR. Approaching redundancy and ensuring you’re in line with the law while treating your employees fairly can be challenging, especially as a small/medium business owner. This guide is a great place to start, but having continued help and advice from our team will benefit you and your staff, and reduce any financial risk to your business. 

Contact the team at NESE HR and we will answer any questions you have surrounding redundancy or any of your other HR concerns.

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