How to manage a potential redundancy situation

How do I manage a potential redundancy situation?

Redundancy is never an easy process – for employers or employees. But when a business faces financial uncertainty, changes in structure, or evolving ways of working, making difficult decisions around staffing may become unavoidable. At this stage, a business may decide to put some roles ‘at risk’ of redundancy.

If you’re navigating a potential redundancy situation, it’s essential to understand your responsibilities, follow a fair process, and approach every step with care and clarity.

The facts:

• Redundancy is a form of dismissal used when a business needs to reduce its workforce.
• There is level of protection for employees on maternity, adoption, or shared parental leave
• You must consult with affected employees before making any decisions
• Consultation periods vary depending on the number of redundancies (different rules for under 20 vs. 20 or more)
• You may need to notify the Redundancy Payment Service (RPS)
• Employees must be given the right to appeal the decision.

Redundancy Process Overview

How does it work and what are the different stages in a potential redundancy situation:

1. What is Redundancy?

In the UK, redundancy is a form of dismissal that happens when an employer needs to reduce the size of their workforce. This could be due to:

• A business or department closing
• Work no longer being required
• Relocation of the business to a different area

Redundancy must not be used to dismiss someone for performance issues or misconduct – those are separate matters.

2. Consider if any issues / concerns have been raised (recently) where a fair process has not been followed:

• Have they raised a concern / complaint due to protected characteristics (Age, Sex, Sexual Orientation, Race, Pregnancy/Maternity, Marriage/Civil Partnership, Disability, Gender assignment, Religion & belief?
• Has the individual made any complaints of bullying or harassment?
• Have they been overlooked for training or promotion or forcibly had their hours reduced against their wishes?
• Has the individual made a flexible working request recently?
• Are they pregnant or on maternity leave (if, applicable)?
• Have they requested to take family leave, for example parental, paternity or adoption leave?
• Are they a trade union member or representative?
• Are they taking part in legal, official industrial action for 12 weeks or less – for example going on strike?
• Have they asserted a legal right – for example to be paid the National Minimum Wage?
• Is the dismissal in anyway connected to their jury service (if, applicable)?
• Are they involved or part of a whistleblowing concern / complaint/‘compulsory Retirement’ – Are they being forced to retire?
• Are they taking action, or proposing to take action, over a health and safety issue?

3. Length of Service

Employees with less than two years’ continuous service don’t have the same level of protection as those who’ve been employed longer. However, best practice is to treat all staff fairly and consistently, regardless of service length.

4. Informing the Redundancy Payment Service

Depending on the number of proposed redundancies, you may need to notify the Redundancy Payment Service RPS:

5. Selecting Fair Criteria

Selection criteria must be as objective and transparent as possible. Examples include:

• Attendance and timekeeping (based on records)
• Disciplinary history
• Skills and qualifications
• Job performance (using appraisals or reviews)

Where objective data isn’t available, take care to ensure any subjective judgments are fair, justified, and non-discriminatory.

Be sure to share this information with employees during the consultation process and give them the opportunity to comment.

6. Individual Consultation Meetings

This stage is a key part of the redundancy process and provides an opportunity for open, two-way discussion. In these meetings, you should:

• Explain why the employee is ‘at risk’ of redundancy
• Share details of the proposed changes and how roles have been selected
• Outline the criteria used in the redundancy pool
• Discuss any available suitable alternative roles (SAE) or ring-fenced positions
• Explore other options such as reduced hours or restructuring ideas
• Allow time off for job searching or retraining
• Invite questions, concerns, and suggestions to avoid or reduce redundancies

You’re not obliged to agree with every suggestion, but you must give each one genuine consideration and respond to any raised points in the outcome letter.

7. Notifying Employees of the Outcome

Once the selection process is complete, invite affected employees to a formal outcome meeting (often called a Notification of Redundancy meeting). If selected for redundancy, they should be informed of:

• Redundancy pay
• Outstanding holiday pay
• Notice period
• Their right to appeal the decision

All of this must be clearly outlined in the outcome letter.