A step by step guide to the redundancy process
Coming to the decision that it is necessary to make redundancies is never an easy decision for any business. Redundancies might be a result of your business partly or fully closing down or your requirement for employees to undertake a particular kind of work has reduced or come to an end.
Handling a redundancy process can be difficult and stressful, impacting all involved from those involved in managing the process, those at risk of redundancy and those that remain within the business.
To help guide you through the process, below is an overview of a redundancy process:
1. Initial planning
Before embarking on any redundancy process, it is important that you firstly consider why redundancies are necessary and whether this can be avoided. Alternatives to redundancy could include retraining employees to work in other areas of the business, introducing a recruitment freeze and limiting overtime. Once alternatives have been explored and it is established that redundancies may be unavoidable, it is useful to prepare who will be involved in the redundancy process at each stage and consider what steps will need to be taken.
Where you are proposing to make 20 or more employees redundant at any one establishment within a 90 day period, you will need to undertake a collective consultation process with appropriate representatives. Where you are proposing to make less than 20 employees redundant, you are not required to follow a collective consultation process, although this can help to demonstrate that you have followed a fair and thorough process.
3. Redundancy selection
It is down to you to determine a fair way of selecting employees. You could decide to allow staff to apply for the remaining jobs, treating selection for those jobs in a similar way to a recruitment exercise. Alternatively, you may choose to assess against skills and qualifications that you need to retain in your business moving forward.
If all the job posts in a particular area are no longer required, it will not be necessary for you to complete a selection exercise as all those occupying these posts will be redundant. This may also be the case where a single post is affected.
You might also decide to ask your team if anyone would like to put themselves forward for you to consider any voluntary redundancies.
4. Individual consultation
Regardless of whether you need to follow a collective consultation process or not, you will need to consult with the individuals who are selected before any notice of redundancy is given. Following Covid-19, you may need to do this remotely and we recommend using virtual meetings where possible.
Firstly, this will involve writing to employees and making them aware they are at risk of dismissal and have been provisionally selected for redundancy. You should then arrange to meet with at risk employees. At the meeting, you should reiterate the reasons for the redundancy and the process followed so far. You should also listen to your employee’s perspective, including any suggestions on how to avoid redundancy. At this meeting, employees have a right to be accompanied.
Following the end of the consultation process, you should meet with your employees and confirm the decision to make them redundant. This should be followed up in writing confirming the statutory or contractual notice period. The letter should also outline the employee’s right to appeal.
5. Alternative employment
You should continue to consider alternative employment for your employees, including during an employee’s notice period. You should also allow your staff reasonable time off to look for new work at this stage of the process. To help your employees further, you could consider offering outplacement support, which might include helping your employees to re-write their CV and prepare for future job interviews.
6. Redundancy pay
In addition to notice pay and any accrued annual leave, your employee may also be entitled to statutory or contractual redundancy pay. For an employee to qualify for statutory redundancy pay, they will need to have two years’ continuous service. The amount your employee is entitled to will depend on their age and length of service. If your employee has been furloughed, new legislation has confirmed that statutory notice pay should be based on normal wages, rather than what has been paid under the job retention scheme.
7. Looking to the future
Following the end of a redundancy process, it is important to continue to show leadership and compassion to your remaining team.
Although they have not been made redundant, they may have been affected by colleagues leaving the business and have also been through a period of change.
A redundancy process can differ depending on the needs and complexity of your business and we recommend seeking support before embarking on a redundancy process.
If you require support with redundancy, please don’t hesitate to get in touch to learn more about our strategic HR consultancy services and how it can support your organisation.
*Please note the above is intended as an overview and not a definitive how-to guide.