"Handling Redundancy with Care: A Step-by-Step Employer’s Guide"

 

Making an employee redundant is one of the most challenging responsibilities an employer can face. It requires careful consideration, clear communication, and strict adherence to legal requirements. This guide walks you through the redundancy process to ensure it’s handled fairly, lawfully, and with as little stress as possible for all parties involved. 

 

 

Redundancy occurs when an employee's role is no longer required due to: 

 

A change in the business's focus 

 

Introduction of new technologies or processes 

 

Relocation of operations 

 

Business closure 

 

It is essential to distinguish redundancy from termination due to misconduct or poor performance. Redundancy relates to the role being eliminated, not the individual. Misusing redundancy as a cover for dismissal can lead to legal claims. 

 

 

Before proceeding with compulsory redundancies, consider these alternatives: 

 

Offer voluntary redundancy or early retirement 

 

Explore flexible working arrangements 

 

Reduce reliance on contractors or agency staff 

 

Implement a hiring freeze 

 

Limit overtime 

 

Redeploy staff to other roles within the business 

 

Taking these steps may reduce the need for redundancies and demonstrate good faith efforts to protect jobs. 

 

Voluntary Redundancy & Early Retirement 

 

Voluntary Redundancy 

 

Employees may volunteer for redundancy, which can be appealing for those considering career changes or lifestyle shifts. This protects others who rely more heavily on their roles. 

 

Early Retirement 

 

Incentives can be offered for early retirement, but they must be available to all staff to avoid discrimination. Retirement must be entirely voluntary. 

 

Offering Alternative Roles 

 

Redundant employees can be offered a different position within the business. To be valid, the offer must: 

 

Be in writing 

 

Be made before the current role ends 

 

Start within 4 weeks of the old role ending 

 

Employees are entitled to a 4 week trial period. If the new role is unsuitable, they may still claim redundancy pay. 

 

Compulsory Redundancy 

 

If redundancies remain unavoidable, the process must be fair and transparent. Employees must be selected using clear, objective criteria. 

 

 

Skills, qualifications, and aptitude relevant to future business needs 

 

Performance and productivity 

 

Attendance records, including punctuality and absenteeism 

 

Disciplinary records 

 

Length of service, when combined with other fair criteria 

 

Document your selection process thoroughly to avoid disputes. 

 

Unfair Criteria (Illegal Grounds for Redundancy): 

 

Pregnancy or maternity related reasons 

 

Family responsibilities (e.g., parental or adoption leave) 

 

Trade union membership or activities 

 

Part-time or fixed-term contract status 

 

Protected characteristics (e.g., age, gender, race, religion, disability) 

 

Exercising rights related to working hours or minimum wage 

 

Using these criteria is unlawful and can result in legal claims. 

 

 

Transparency: Communicate openly with employees about what’s happening and why. 

 

Consultation: Discuss redundancies with affected staff or their representatives. 

 

Support: Offer career guidance, retraining, or outplacement services. 

 

Record keeping: Document all decisions and communications throughout the process. 

 

Redundancy Consultation Requirements 

 

If you plan to make 20 or more redundancies within a 90-day period, you must conduct a collective consultation. 

 

 

Notify the Redundancy Payments Service (RPS) before starting consultations. 

 

Consult with employee or union representatives, or with employees directly if no representatives exist. 

 

Provide clear information, including the reasons, selection criteria, and timeline. 

 

Respond to questions and feedback promptly. 

 

Issue formal redundancy notices once the consultation ends. 

 

 

After consultation, employees must receive formal notice: 

 

1 month to 2 years’ service: 1 week’s notice 

 

2 to 12 years: 1 week for every year of service 

 

12+ years: 12 weeks’ notice 

 

Alternatively, you may choose to provide pay in lieu of notice, allowing the employee to leave immediately while being compensated for the notice period. 

 

 

To qualify for statutory redundancy pay, an employee must: 

 

Have a valid employment contract 

 

Have at least 2 years of continuous service 

 

Be dismissed due to redundancy 

 

Note: Early retirement disqualifies an employee from redundancy pay. 

 

 

Half a week’s pay for each full year under age 22 

 

One week’s pay for each full year aged 22–41 

 

One and a half weeks’ pay for each full year over age 41 

 

Calculations are capped at 20 years of service and a weekly wage of £571, with a maximum statutory redundancy pay of £17,130. 

 

Seek Professional Guidance 

 

If your business is considering redundancies, it’s vital to seek professional advice. With expert support from JSB, you can ensure your decisions are compliant with employment law and handled with care and integrity.