How to Make Redundancies:
Top 7 Steps
We know from speaking to a number of businesses, that many are considering redundancies.
You might be thinking about how to make redundancies in your organisation. We understand that the after-effects of the global pandemic, rising inflation, and the cost of living crisis is putting a lot of strain on most businesses which means difficult decisions have to be made. If your only option is to make redundancies, you must still comply with UK employment legislation.
There are steps you have to take, and in this article, we will go through the process you should take:
Create a Redundancy Plan
It’s important that you create a redundancy plan and share this with your affected employees. You must work with an employee representative or any trade unions when making this plan, if you’re consulting collectively. We’ll cover more on that later. If it’s individual consultation, then you should share this plan with affected people on a 1-1 basis. This should include:
- All the alternatives to redundancy you’ve looked at before coming to this conclusion
- The number of redundancies you may have to make
- Ways you will support employees and keep them informed during this process
- How you will consult with employees affected (this should include staff who are off work, for example long-term sick or maternity leave)
- Information on redundancy pay
- Plus more
You should also have the reasons and when you made the decision to make redundancies documented in your Executive/Leadership/Senior Management Team minutes. We had a client successfully defend an employment tribunal case 18 months ago, and the judge commented on the fact they had produced a good business case for proposing redundancies and this was documented in their minutes, details of which were shared at the employment tribunal hearing.
If you would like help with creating a redundancy plan, feel free to contact our HR Consultants.
At Risk Meeting
Once you have outlined the business reasons for making redundancies, you should then hold a meeting to inform your staff. You should make it clear that employees can ask questions at any time. If your team work remotely, you can hold this meeting remotely. For staff who are at risk of redundancy, you should confirm in a letter to confirm they are at risk, the business reasons and any other options they have such as voluntary redundancy or outplacement, and your consultation plans.
In this short video, we demonstrate how you may conduct the initial at risk meeting.
You need to consult with employees when you are proposing to make redundancies. This involves explaining why the role is being made redundant, explore any alternatives to redundancy and listen to their views.
If you are proposing to make up to 19 redundancies, there are no rules about how you should carry out the consultation or timeframe. We would still advise you to follow a consultation process, which would involve a series of meetings.
If you’re making 20 or more redundancies at the same time, you need to comply with collective redundancy rules. This means you will need to consult with elected employee representatives or a trade union representative (if a collective agreement exists). You can find out our full advice on a redundancy consultation in our latest blog.
Collective consultations must cover:
Ways to avoid redundancies
The reasons for terminating employment
How to keep the number of dismissals to a minimum
How to limit the effects for employees involved, for example by offering retraining
Selecting Employees for Redundancy
When selecting employees for redundancy, you need to make sure it’s fair. If you’re making a department or full team redundant, you should have already shared a clear plan and list of job roles you have to make redundant.
However, if you are having to reduce the number of employees in your business, you must make a ‘selection pool’.
You will need to provide a selection matrix, detailing the criteria, and share this during consultation, obtaining feedback on the measures you plan to use. The selection matrix must be fair and objective, and should cover things such as:
- Attendance and Timekeeping
- Skills and Knowledge
Having documented performance discussions will help support these decisions, as will have having records of absence. Whilst it’s okay to have a mix of objective and subjective criteria, you must be able to evidence this and you should have more objective evidence. You should also consider factors such as discrimination – for example, if someone has had pregnancy related or disability related absences, allowances should be made in their attendance score.
Calculate Redundancy Pay
The next thing to consider is redundancy pay. You must pay at least the statutory minimum redundancy pay to staff who have worked for you for at least 2 years. You can find out more about how to calculate redundancy pay in our latest blog post.
Once you’ve finished the consultation process and gone through the selection process, you can then give your staff notice. It’s important that you meet with ALL staff members who were at risk off redundancy. If it’s not possible to do this face to face, you can do this through a video call.
You must let your staff know they can be accompanied at this meeting. You must also put the details in writing.
You must offer people an opportunity to appeal against the redundancy decision, once this has been confirmed. This will help you to make sure the redundancy process was fully compliant and will help you to avoid a tribunal claim. It also gives you proof that you followed a fair process.
Do You Need Help with Redundancies?
This can be a confusing process. However, it doesn’t have to be. At The HR Booth, we rely on decades of combined experience to find alternatives to terminating employment if possible. If there’s no other alternatives, we will help you to execute the process with skill and according to proper procedure.
Learn more about our redundancy services by contacting us now. We look forward to answering any remaining questions you may have.
Finally, please seek advice before undertaking any form of redundancy consultation.