Redundancy can be tricky and it must be handled the proper way to safeguard your business. So, you’re totally right to ask for tips!
On a human level though, you’ll want to make sure you minimise any stress for both you and your employees – after all, it’s a horrible situation to be in.
To help you along, here are my top ten tips for small businesses with up to 20 employees. It’s worth remembering that different rules apply for bigger companies.
And whilst this isn’t a comprehensive guide to redundancy – I hope you find it useful – and it inspires you to do the right thing by everyone 👍
1. UNDERSTAND WHAT REDUNDANCY REALLY MEANS
GOV.UK defines redundancy as: “Dismissing an employee because you no longer need anyone to do their job.”
Okay, so the key word here is “anyone”. In other words, you can’t use redundancy as a way to get rid of somebody in particular – and then get another person in to do their job afterwards 🚫
2. DEFINE YOUR ‘WHY?’ FOR REDUNDANCY
Be super clear on why you’re thinking of taking the redundancy route 🤔
It might be because you’re downsizing, closing down a department, or changing your set-up in some other way. Or, it could be that the coronavirus pandemic has hit your business hard.
Whatever the reason, document it. Why? Because when the time comes to discuss things with your employees – you’ll need to be confident in your own mind why you’re even considering redundancy.
Remember, you’ll need to demonstrate a genuine business need for redundancy – as opposed to a personal one.
3. HAVE A PLAN BEFORE YOU START
If you’ve got a redundancy policy, make sure you dust it off and stick to what it says. If you don’t have one, it’s not too late to make a redundancy plan.
Acas recommend your plan should cover things like: how you could avoid redundancies; how you’ll discuss things with your employees; what your selection processes will look like; what redundancy pay arrangements you’ll make; and the timescales you’ll stick to.
You don’t have to pull this together by yourself. Ask a trusted rep within your business to help you. And/or get help from a HR pro 😉
4. THINK ABOUT WHAT ELSE COULD YOU DO?
In loads of cases, redundancy is triggered by a financial need to make cost savings. But these savings could potentially be made in other ways 💷
So, ask yourself this: can you REALLY demonstrate that you’ve exhausted all other options?
If the worst was to happen – and you were accused of doing something wrong – you might need to show that you explored every other avenue, before considering redundancy.
With a bit of creative thinking, there might be a way to avoid redundancy. For example, by accepting requests for flexible working. You may have somebody who’s asked for fewer hours in the past to care for a child. Now could be the time to say yes!
When you’re weighing up the options, make a note of the advantages and disadvantages – as these will no doubt come up again in future discussions.
5. CONSULT, CONSULT, CONSULT
If you’ve less than 20 employees at risk of redundancy – GOV.UK says there aren’t any hard and fast rules around the consultation process. But, DON’T begin the process with a decision already made. NOOO! The whole point of a consultation is to see if you can avoid redundancies.
You’ve gotta give your employees the opportunity to hear from you. And more importantly, for you to listen to them. They’re entitled to this consultation, so do it! Also, involve any employee affected by a redundancy decision you might make. Not just those at risk.
Redundancy Expert sum up the purpose of a consultation very nicely. They say it gives everyone an opportunity to:
- To discuss the ‘why’ of redundancy. In other words, why it’s happening in your business, and why it’s potentially happening to particular people❓
- To discuss what the alternative options might be. For example, moving your employee/s into different roles within the business 🤔
Remember to document all discussions, and if needs be, have your HR pro in the room with you during these consultations.
6. KNOW WHAT YOU COULD BE ACCUSED OF
Oh yeah! The redundancy process is a sensitive one that needs to be handled with kid gloves. But knowing in advance what you could be accused of doing wrong – will help you to do things right 🙂
For example, your employee could complain that you’ve treated them unfairly if you’ve recently taken on other people who do a similar job to them. Or, they could say you’ve targeted them because you simply don’t get on.
When selecting people for redundancy, remember you’re not allowed make any decisions based on things like: age, race, gender, religion, disability, pregnancy, sexual orientation, part-time status, or trade union membership.
7. UNDERSTAND THE COST OF REDUNDANCY
If your employee has been with you continuously for over two years, and redundancy is the final outcome – they’ll be entitled to redundancy pay.
You’ve gotta pay this no later than their final pay date, unless you’ve both agreed to something different.
This redundancy pay will depend on their age, and how long they’ve worked for you. For example, if they’re aged between 22 and 41, you must give them one week’s pay for each full year they’ve worked for you beyond the age of 22. Plus, half a week’s pay for each full year they worked for you before the age of 22.
👉 Check out the Acas website for the very latest info on this.
8. KNOW THE NOTICE PERIOD
When you make an employee redundant, you have to give them a notice period. And this is based on how long they’ve worked for you.
Acas advise that:
- If it’s between one month and two years – you give them at least one week’s notice.
- If it’s between two and twelve years – you give them one week’s notice for every year worked.
- If it’s over twelve years – you give them twelve weeks’ notice.
Of course, if your employee has a contract that says something else – do that!
9. YOU NEED TO OFFER THEM THE RIGHT TO APPEAL
If you make someone redundant, it is classed as a dismissal, so you might give them the right to appeal your decision. This should be communicated as part of the redundancy confirmation letter and is usually around 5-7 days (it will be in your redundancy policy if you have one).
10. BE A DECENT HUMAN BEING 💚
The redundancy process can throw up all sorts of emotions. And what’s more, you might feel as if it’s taking you away from the critical day-to-day running of your business – which can be massively frustrating in itself. However, stay calm and be kind.
In my experience, employers can dominate the conversation by overly explaining how hard it is for them to let people go, and to overstate the rationale for why it’s happening. Yes, empathy is great and explanations are totally required – but please remember to make them the centre of any discussions – and allow them to speak and express how they’re feeling.
In other words, go above and beyond to treat them with decency.
If you want to make sure you get things right and save bags of time, check out my Redundancy Toolkit.
TO SUM THINGS UP THEN
⚠ Yep, redundancy needs to be sensitively handled and done the proper way.
✅ Be super clear on what redundancy means, why you’re considering it, and get a plan in place.
🤔 Take time to figure out what else you could do to avoid redundancy.
💬 Involve your people in any discussions on this. And yes, consultations are a must!
⚖ Get a handle on what you could be accused of – to keep you on the straight and narrow.
📚 There are rules around how much you must pay your staff and what notice you need to give them.
💑 Be kind and go above and beyond to be human – during what could be – a yucky time for all.
If any of this feels like it’s just too much to do alone, book a free consultation with me and let's talk it through.
Virtual HR Director & Leadership Mentor. I create game-changing HR & Hiring Strategies for ambitious small businesses in the UK and support you to lead your team with confidence. Check out my shop to download HR Templates & Contracts designed to make life easier.