Redundancy


Is there an alternative to redundancy for your business and if not, how to make sure you get the process right.

Many businesses are looking for ways to reduce costs following on from the October 2024 budget and the increase announced to Employer’s National Insurance contributions which begins 6 April. Reducing staffing levels is one way of achieving this, but is this a good enough reason to make redundancies within your business?

It is important to note the difference between redundancy and dismissal. Redundancy takes place when a position is no longer required due to changes in the business such as restructuring, a change or reduction in workload or closure. Dismissal is where the employment relationship is ended because of the individual, which could include issues around poor performance, breaches of employment contract or serious issues of misconduct. 

Before making any compulsory redundancies, employers are expected to consider whether there might be other options to protect employees. This can include:

  • • A freeze on hiring new staff.
  • • Looking to retrain staff for new positions within the business.
  • • Offering voluntary redundancy and early retirement.
  • • Offering changes to working conditions such as reducing hours and pay.
  • • Ending the use of non-employees such as contractors and freelancers.

If you are considering making any redundancies within your business then it will be important to consider the size of your business, the number of redundancies you are considering and how to run a fair and compliant process. There are differences where there are a handful of positions as opposed to 20 or more and it is important to take legal advice at a very early stage.

When entering a redundancy process it is important to: 

  • • Review employment contracts and the employee handbook and check any contractual redundancy process is up to date. If there is no internal process seek guidance on the right way to proceed or check with ACAS.

  • • Confirm that there is a legitimate reason for redundancy and how that decision was reached.

  • • Identify redundant roles and how they may be at risk.

  • • Develop objective redundancy selection criteria to select employees for redundancy which might include: 
    • – Skills and performance 
    • – Qualifications 
    • – Attendance records 
    • – Disciplinary history 
    • – Length of service

  • • Consult with employees in either case but where there are 20 or more redundancies or more planned within a 90-day period this has a more prescriptive set of rules.
  • Explore alternative employment opportunities within the organisation for those at risk. If an employee accepts an alternative position, then they are not entitled to statutory redundancy payments.

  • • Remember to research and understand trial periods of any new role.

  • • Communicate clearly so inform employees who have been provisionally selected for redundancy at a face-to-face meeting and follow up in writing with details of the right to appeal, notice period and what payments will be made to them.

  • • If an appeal is made, then there should be a clear process for handling them in place which is adhered to and a final decision clearly communicated.

  • • Make sure redundancy payments are calculated correctly as those who have worked for the business for two years will be entitled to statutory redundancy pay which is based on age, weekly pay and length of service. Remember to add on service where employees have transferred to the business under TUPE.

  • • Support those being made redundant with access to support services and information.

If redundancy is unavoidable, it should be handled correctly and sensitively to reduce the financial risks as well as damage to the business’s reputation. 

To discuss your options and legal obligations, get in touch with our team today.