Navigating Redundancy with Empathy, Strategy and Legal Compliance
Redundancy is one of the most difficult decisions an employer can face, particularly for small and medium-sized enterprises (SMEs), where team members often feel like family. While it’s sometimes an unavoidable part of running a business, how you handle the redundancy process can make a significant difference – not only to the individuals affected, but also to the future of your business and the morale of your remaining staff.
In this blog, we’ll guide you through the essential steps to manage redundancies correctly and compassionately in the UK, helping your business remain compliant, ethical, and resilient.
Understand What Redundancy Really Means
First and foremost, it’s critical to understand what redundancy legally entails. In the UK, redundancy occurs when a role is no longer required – whether due to business closure, restructuring, relocation or a reduced need for specific work. It’s the role that becomes redundant, not the person.
Employers must avoid using redundancy as a cover for issues such as underperformance or misconduct. Doing so could result in an unfair dismissal claim. Ensuring the legitimacy of your redundancy rationale is the first step in a fair and lawful process.
Explore Alternatives Before Proceeding
Before moving into formal redundancy proceedings, businesses should explore all reasonable alternatives. Redundancy should always be the last resort.
You might consider reducing overtime, freezing recruitment, offering flexible working arrangements or exploring redeployment opportunities within the business. Some organisations also offer voluntary redundancy or early retirement schemes as a way to minimise compulsory job losses.
These measures show you have taken a thoughtful and measured approach. Keeping records of these efforts can help protect your business should the redundancy process be challenged later.
Build a Clear Business Case
Having a solid business case for making redundancies is essential. This involves clearly documenting the commercial or operational reasons driving the decision. Whether it’s cost-cutting, a change in business direction or the impact of external market forces, your rationale should be transparent, logical and well evidenced.
Outline which roles are affected, explain why they are no longer required, and provide a proposed timeline for implementation. If the decision is ever reviewed – internally, externally, or legally – this documentation will be invaluable.
Fairly Identify Roles at Risk
If you are reducing headcount within a specific team or department, you will need to fairly identify which roles are “at risk.” This process is often referred to as defining the “selection pool.”
The criteria used to select individuals must be objective, measurable and non-discriminatory. Common criteria include skills, qualifications, performance history and disciplinary records. Be cautious with factors like length of service, which could indirectly discriminate against younger employees unless justified by legitimate business reasons.
Getting this step right is essential to avoid legal risk and maintain fairness throughout the process.
Consult Meaningfully and Legally
Consultation is not optional – it is a legal requirement, and one that must be handled with care. Even if you’re making fewer than 20 redundancies (the threshold for collective consultation), individual consultations are still required and must be meaningful.
During consultations, explain the reasons behind the proposed redundancies, invite feedback and give employees the opportunity to raise questions or suggest alternatives. Ensure the process is inclusive of those on leave, such as maternity or long-term sick leave, who still have the right to be consulted.
If 20 or more redundancies are proposed within a 90-day period, collective consultation rules apply, including notifying the Redundancy Payments Service and adhering to minimum consultation periods.
Offer Suitable Alternatives Where Possible
Even after the consultation stage, you have a legal obligation to search for and offer suitable alternative employment within your business. If a potentially suitable role is identified, the employee can undertake a four-week trial period to assess its suitability without forfeiting their right to redundancy pay.
This approach not only helps reduce redundancy costs but can also retain valuable talent and preserve business continuity.
Deliver the Outcome Clearly and Compassionately
Once decisions are finalised, issue formal redundancy notices in writing. This should include the reason for redundancy, the notice period and the final date of employment. Employees who have worked for you for two years or more will also be entitled to statutory redundancy pay.
Additionally, affected employees are entitled to reasonable paid time off during their notice period to attend job interviews or retraining sessions. Making this process smooth and supportive reflects well on your business and reduces the risk of grievances or legal disputes.
Manage Appeals and Offer Support
Even in the most carefully managed redundancy process, emotions can run high. Allowing employees the right to appeal the decision provides a further safeguard and demonstrates procedural fairness.
Beyond the legal requirements, consider how you can support employees as they transition. Offering career coaching, CV workshops, access to job listings or even signposting mental health support through an employee assistance programme can make a real difference to someone facing job loss.
How you treat people on the way out is just as important as how you bring them in.
Document Everything
Keeping comprehensive records at every stage of the process isn’t just best practice – it’s essential. Document your business rationale, the alternatives explored, how the selection pool was determined, the consultation process and the final redundancy outcomes.
If an employee challenges your decision through an employment tribunal, detailed documentation can provide a strong defence and demonstrate that your actions were lawful and fair.
Communicate with the Remaining Team
Once redundancies have been confirmed and implemented, it’s important to focus on those who remain. Redundancy can affect the whole team, sparking fear, uncertainty or even resentment.
Hold a team meeting or issue a company-wide update to explain why the decisions were made and what the future looks like. Be honest, compassionate and open about how roles may change and what support will be available moving forward.
Rebuilding trust, boosting morale and re-engaging your team should be a top priority post-redundancy.
Final Thoughts
Redundancy is never an easy decision. But when approached with empathy, transparency and legal due diligence, it can be managed in a way that protects your people, your culture and your business reputation.
If you’re facing the prospect of redundancies and want expert HR support tailored to your business, Haus of HR is here to help. We specialise in guiding businesses through the challenges of the redundancy process – from planning to communication to legal compliance.
Get in touch today to talk through your next steps with confidence and care.