Redundancies – The Small Business Guide

If you are reading this blog you are likely to be a small business owner faced with the difficult situation of needing to reduce staffing levels.  Making someone redundant is one of the hardest things you'll ever have to do in a work situation – and for the sake of your small business, you need to get it absolutely right.

Employers can find lots of useful advice regarding redundancies on the ACAS website; however, it can still be a daunting task. Our HR consultants have experience of managing redundancy programmes in large and small businesses and can guide you through the complete process. We will work with you to show you how to run a redundancy process that's both in line with the law and fair for your employees.

We can advise you on the legal, technical and employee relations aspects including:

  • Your legal obligations as an employer
  • Preparing a business case
  • Communicating and consulting with employees
  • Employee rights
  • Selection criteria (if required)
  • Calculating redundancy payments
  • Writing of all letters and announcements
  • Handling meetings with staff
  • Ways of avoiding redundancy, suitable alternative roles and trial periods
  • Working effectively with trade unions
  • Handling of appeals
  • Outplacement support

We will provide all letters and templates for meetings and can either provide remote off-site support or be present at meetings with you.  We aim to make the process as pain-free as possible for both yourself and your employees.


Redundancy because of Coronavirus

Furlough payments were put in place by the government to try and avoid redundancies as a result of coronavirus. However, it is thought that unfortunately at least a quarter of UK employers are expected to make some redundancies due to the pandemic. If you find that redundancies are unavoidable purely due to this situation, you must still must follow normal fair redundancy procedures.

There may be logistical challenges in following ordinary principles if your employees are not at work, especially regarding communication and consultation. The stages can be undertaken remotely (for example holding a meeting by Zoom) but this will require careful planning. All employees affected must have the equipment and skills to participate in a digital process.

Steps to Follow

1.  Have a redundancy plan

Including a business case and timescales.

2.  Look at ways to avoid compulsory redundancies

Consider natural wastage, recruitment freeze, short time working, etc.

3.  Selection Criteria

Selection will be necessary if there is a pool of employees doing the same role. Selection criteria could include, attendance and disciplinary records, competencies, qualifications and length of service (provided this is not the only criteria).

4.  Consult with your employees

If more than 20 employees are to be made redundant in your company, speak to us and we can advise you on the process for collective consultation.

5.  Work out redundancy pay

Provide employees with redundancy illustrations detailing the redundancy package.

6.  Give employees notice of redundancy

Once the consultation process is concluded, the decision should always be followed up in writing. The letter should include:

  • leaving date
  • redundancy payment due
  • any other pay you owe them such as holiday pay
  • when and how you'll pay them
  • how they can appeal

7.  Support your team and plan for the future

Handling redundancies well gives remaining staff confidence the business treats its employees fairly and with respect.  Getting it wrong can have a significant impact on the retention rate of those that remain.   After going through an unsettling period it is important to boost the morale of those left behind and ensure that they feel secure and valued. 


This guide is intended to be a quick summary of steps to be taken in a redundancy process. If it is not something that you are familiar and experienced with, we recommend that you should always take professional advice.

For further information and an informal discussion, we can be contacted on [email protected] or 01656 336097.