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9 min read

How do I make someone redundant?

Making an employee redundant is never easy, but following the redundancy process step by step will ensure you treat employees fairly and protect your business from future legal action. As well as looking at alternatives to making your staff redundant, this article will look at all the legal considerations and steps you’ll need to follow in making someone redundant. 

What is redundancy?

The economic impact of COVID-19 has sadly left many businesses with little option but to downsize their workforce in order to survive.

When you make someone redundant, you remove their employment on the basis that there is insufficient work available for them to do. This is different from simply firing someone.

Remember, the UK has specific rules that businesses must follow when it comes to large-scale redundancies. Anyone you make redundant could also appeal the decision if they feel that it isn’t made fairly. That means you should ensure that you stick to redundancy procedure, UK to avoid legal issues in the future.

Redundancies are generally considered a last resort, so if you read on you’ll discover some alternatives to making your staff redundant. If you’ve exhausted all other possibilities and you’re still planning on making someone redundant, then you’ll also find detailed guidance on how you should pursue this.

Is redundancy the only option?

No employer wants to make staff members redundant unless they absolutely have to. There are other routes you can potentially take to cut staff costs and prevent redundancies. Here are some of the options to explore:

  • Seek government support.
  • Negotiate with your employees and agree on a short-term cut in salary and hours.
  • Offer staff members unpaid leave until your business’s economic situation improves.
  • Restrict overtime and withdraw non-contractual benefits.
  • Redeploy current employees – offer them new roles instead of making them redundant.
  • Cut back on other costs – during periods of financial hardship, your business should stick to what is strictly necessary in order to survive. Your business certainly shouldn’t be recruiting new staff members if it’s simultaneously considering making current employees redundant. 

Many of these changes may require employee consent, depending on the terms of their contract. To obtain their support, it’s advisable to explain the financial difficulties that the business is experiencing. Explain that these measures are temporary and that they are being implemented to prevent compulsory redundancies.

Your employees may not like the measures, but they’re far more likely to accept them if they understand their motivation. Direct, transparent communication between leadership and employees will be an asset during this difficult time.

Before you start making people redundant, you should explore every possible alternative to forced job losses. It may be that you’re actually able to retain your current team, which is surely the best outcome imaginable.

What alternatives are there to redundancy?

Let’s go into a bit more detail and explore some of those alternatives to redundancy.

  • Seek government support

    First, you should check and see if any government support is available. For example, during the COVID-19 pandemic, the government announced a Coronavirus Job Retention Scheme. This was designed to support businesses so they could continue to pay a percentage of wages despite interruptions to usual business activity.

    Given that the purpose of this scheme was to avoid redundancies, it’s worth exploring if the government has any other schemes that could help you avoid this eventuality. You should also check whether your employees have “short-time working” clauses in their contracts. If so, you could potentially reduce their hours on a temporary basis.

  • Cut hours

    If your contracts do not permit short-time working, then you could ask employees to agree to a temporary cut in hours and salary. This would naturally have to be negotiated with each employee. A more extreme version of this would be to offer your employees a period of unpaid leave. Some businesses that didn’t qualify for the Coronavirus Job Retention Scheme were forced to do this to survive the crisis.

    Will your employees accept this reduction? If they understand that the motivation behind the change is avoiding redundancies, they may be willing. After all, it’s better than making someone redundant. This is where quality communication between employer and employee becomes very important.

    There are other alternatives to redundancy such as restricting overtime, freezing recruitment, and withdrawing non-contractual benefits. Read on to see if any of these solutions would suit your business.

  • Restrict overtime

    This is one of the most obvious things you can do to reduce staff costs. If you’re considering making team members redundant, it’s unlikely that your current working situation requires overtime. Keeping employees to their contracted hours and salary will help you stay on budget and avoid redundancies.

    To do this legally, you should check whether your employees have a contractual entitlement to overtime. If they don’t, you can restrict this or remove it entirely to reduce staff costs. If they are entitled to overtime, you’ll have to get the consent of your employees to make this change.

    This may be an unpopular decision, especially if staff members have come to depend on the extra salary that they receive for working overtime. To smooth over the situation, it’s best to explain the situation with openness and honesty. Employees will be much more understanding if they realise this measure is being enforced to avoid redundancies.

    You should also reassure them that this is a short-term change: when the business is in a better financial situation, overtime will return.

  • Freeze recruitment

    If your business was in the process of recruiting new staff members, you should retract these offers. Explain that the business is in a period of economic difficulty and reassure candidates that you will contact them should the situation change in the near future.

    When your business is experiencing the kind of problems that lead to redundancies, it’s best to freeze all recruitment for the time being. Instead, consider redeploying staff members that would otherwise have been targeted for redundancy toward new roles. Could they take over another position and keep their job? Although this might require extra training, it’s still probably cheaper than the process of inducting a brand-new employee into the organisation.

    Of course, if their job description is intrinsic to their contract, this change will have to be negotiated directly with the employee. An employee who likes their current role may be hesitant to transfer to a new department or undertake new responsibilities. However, if they understand that the alternative to this redeployment offer is redundancy, they’re more likely to understand and agree to the change.

  • Withdraw non-contractual benefits

    To reduce costs and save jobs, you may be forced to withdraw non-contractual benefits. These could include bonuses and other incentives. Ensure that these benefits are non-contractual, though. If they’re considered an entitlement as per the terms of your employees’ contracts, you’ll have to obtain their consent to withdraw them.

    Although staff are likely to be disappointed by the loss of these benefits, you can assure them that this is a temporary measure only. Employees who appreciate the financial situation of the business should better understand why these measures are being taken.

What is the redundancy process in the UK?

If you’ve explored all of the above alternatives and you still need to make redundancies, it’s very important that you follow the correct process. This will ensure that you handle the redundancies as fairly as possible, and it will protect your business from problems in the future.

For large-scale redundancies, businesses need to meet certain legal requirements. Firstly, objective criteria should be used to decide which employees are at risk of redundancy. Then, employees must be told about the potential for redundancy. The reasons behind the decision must be explained, too.

Lastly, employees must be able to participate in a consultation process in which they can give feedback on the proposed conditions of their redundancy. This gives them the opportunity to make suggestions, for example, regarding the potential for redeployment.

Even when it comes to small-scale redundancies, employees could potentially appeal the decision. That’s why it’s important to make the process as fair and transparent as possible. If the process of making someone redundant is proven to be discriminatory, this could cause your business significant legal problems.

To ensure that you follow the correct redundancy procedure, UK, then read on. Here is the redundancy process step by step.

  • Warn employees of the risk of redundancy

    First of all, employees must be informed that redundancies are being considered in advance. This is important not just because employees deserve a fair warning, but also because some employees may actually nominate themselves for redundancy.

    This could make the process much easier! After all, voluntary redundancies are always preferrable to compulsory ones.

    Of course, when you make this announcement, your employees are bound to respond with a certain level of anxiety. It’s a good idea to prepare the announcement and make it as thoughtful and sensitive as possible. You can achieve this by fully explaining the economic situation of the business and why redundancies are being considered.

    Your employees will want to know that you have explored other options and that redundancies are not being taken lightly. You may find that they’re more understanding of your position if you explain the motivations behind the decision honestly and directly.

    You should also anticipate your employees’ questions as much as possible. The less uncertainty surrounding the process, the better. Explain how employees will be selected for redundancy and give an approximate timeline outlining when these decisions will be made.

  • Identify the redundancy pool

    Although there are no fixed rules regarding the identification of your redundancy pool, you will have to be able to prove that it was reasonable in relation to your specific circumstances. Otherwise, an employee could appeal your decision.

    A good way to start defining your pool is to consider what particular kind of work is disappearing. For example, if your business remains in high demand, but nobody is using your telephone customer attention service, then it’d make sense to focus on employees whose roles belong to that department.

    If the situation is less straightforward, you’ll have to think about the workload of each employee and the extent to which their responsibilities are interchangeable. You should also compare the terms of their contracts. Lastly, you may be obliged to speak to union representatives in the process of agreeing on the redundancy pool.

  • Decide on the redundancy selection criteria

    When you have established your redundancy pool, it’s time to create the criteria you’ll use to decide who is made redundant. During discussions with your employees, you should have received some feedback regarding selection criteria.

    The criteria you choose should be as objective as possible. It should also be measurable. This helps to limit the impact of personal opinions and potential prejudice. Every employee should be compared against the same standards. This will also make your decisions easier to account for.

What does my selection criteria need to factor?

Your selection criteria might include the following factors:

  • Top view of business people shaking hands
    Performance

    If you already have specific criteria measuring performance, then this could be repurposed during this process.

  • Salesperson interacting with customer
    Skills and experience

    By determining the skills and experience that your company requires to function, you can exclude certain employees from potential redundancy.

  • Unrecognizable businessman walking in an office.
    Qualifications

    It would make sense to retain staff that you’ve already trained to a high level.

  • Full office
    Disciplinary record

    This way, you can reward employees who have performed consistently by protecting them from redundancy.

  • Teen girl doing homework on her laptop
    Work responsibilities

    A common reason for making someone redundant is that their specific contributions are no longer needed.

Consult with staff as a group

Consulting with staff is good practice regardless of how many redundancies you have planned. If you have more than 20, then you’re legally obligated to participate in collective consultations.

When you provide employees with advance notice of the need for redundancies, you should also inform representatives such as trade unions. This is an opportunity to receive feedback regarding the plan you have proposed. Employees may challenge your decisions or offer alternative solutions.

Because employees have the right to respond to your plan, you have to provide sufficient time before dismissals are due to take effect. Depending on the number of redundancies in your plan, the minimum advance warning you must provide is between 30-45 days.

Making an employee redundant

Even if you’re only making one employee redundant, you should still consult with them. Together, you should have explored potential alternatives before proceeding with redundancy. They should understand exactly why redundancies are necessary and why they have been selected for redundancy.

You’ll be expected to invite the employee to a formal meeting. A trade union representative or a colleague may also assist to support them. The conditions of their redundancy should be given in writing. You should also explain to the employee that they have a right to appeal their redundancy.

What are the employee redundancy rules?

If you plan to make 20 or more employees redundant, then there are collective consultation laws that you are obliged to follow as an employer. If you don’t follow these laws, you may end up paying out awards to all affected employees.

These laws include informing appropriate representatives, such as trade unions, of your decision to enforce redundancies. At this stage, you should provide the number of redundancies required, the reasons behind this action, and how you plan to select employees.

You should also provide details regarding how you plan to carry out the redundancies. This includes timelines and payment amounts.

You have to begin consultations at least 45 days before the first dismissal if your proposal involves 100 or more redundancies. If you’re planning fewer than 100 but more than 20, then the minimum time period is 30 days.

There aren’t any set rules for less than 20 redundancies, but to protect yourself from future appeals and to treat all employees fairly, it’s a good idea to consult with employees and representatives anyway.

The consultation period gives employees and their representatives time to express their opinions about the proposed plan. The goal is to reach a consensus between employee and employer. With that in mind, it is your responsibility as an employer to respond to any requests for information that you receive during this process.

What is the statutory redundancy pay?

  • Employees who have worked for 2 years or more with your company are entitled to statutory redundancy pay.
  • For every full year employees worked under the age of 22, they will receive half a week’s pay.
  • For every full year worked between the ages of 22 and 41, they will receive one week’s pay.
  • Every full year worked after the age of 41 entitles employees to one and a half week’s pay.
  • The length of service is capped at 20 years, and the amount taken as “weekly pay” is the average earned per week for the 12 weeks prior to receiving a redundancy notice.
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