Redundancy is tough for you and your team. Maybe sales have dropped, a client contract has ended, or you’re streamlining roles to cut costs. Whatever the reason, making someone’s job redundant affects real people with bills to pay and families to support. And if you don’t have an in-house HR team, knowing where to start can feel overwhelming.
The legal steps matter, but so does how you handle it as a human being. Here's what to think about if you want to get it right, both on paper and in practice.
First, do you really need to make a redundancy?
Redundancy must be about the role, not the person.
Ask yourself if the job is genuinely no longer needed. Have your business needs and ways of operating changed? For example, you may have reduced demand or introduced new technology to automate tasks resulting in less human input required. If so, it is likely to be considered a genuine redundancy.
However, making someone redundant because of poor performance or attitude is a big no. That’s a different process altogether and mixing the two can land you in hot water.
Are you following the legal process?
Even small businesses need to follow UK employment law when it comes to redundancy. Here's a brief checklist:
- Fair reason: The redundancy must be genuine.
- Fair process: You must follow a fair process and consult with the employee(s) before making a final decision to make sure you consider all alternatives to redundancy. Yes, even if it’s just one person.
- Selection: If more than one person is at risk, you need fair, objective selection criteria (e.g. skills, experience, qualifications)that are not discriminatory, either directly or indirectly.
- Notice: Give proper notice based on their contract of employment or statutory minimum.
- Redundancy pay: Employees with 2+ years’ service are usually entitled to statutory redundancy pay based on their age and length of service which can be calculated here: https://www.gov.uk/calculate-your-redundancy-pay
Remember, failing to have a fair reason or to follow the right steps (referred to as a fair process) can lead to claims for unfair dismissal.
Are you handling it with empathy?
You might get the legal stuff spot-on but still damage your reputation or your team’s morale if the process feels cold or rushed. Think about how you deliver the news. D, do it face-to-face if possible, and with sensitivity. Offer support, even if it’s just a reference or helping them update their CV. You need to communicate clearly with the rest of your team, so they don’t worry they are next.
Kindness doesn’t cost anything, and it goes a long way in tough times.
Common mistakes small businesses make
Even when you’re trying to do the right thing, it’s easy to make mistakes during a redundancy process. One common slip-up is calling it redundancy when it’s actually something else, like poor performance or bad behaviour. That’s a different situation and needs to be handled another way.
Another mistake is skipping the consultation stage, especially if only one person is affected. But the law says you still need to have that conversation first and to take the time (at least a week) to consider all alternatives to redundancy.
Sometimes, business owners decide who to let go based on gut feeling instead of using clear and fair criteria. That can lead to complaints of unfair treatment. It’s also easy to forget about redundancy pay or get the notice period wrong.
You don’t need to be an expert in employment law but you do need to spot these issues early so they don’t come back to bite you.
So, is your redundancy process sound?
If you’re thinking about letting someone, go due to redundancy, take a step back. Ask these questions first:
- Is the reason for redundancy clear and fair?
- Am I treating the person with dignity and respect?
- Can I explain this decision confidently in writing?
- If you are unsure, it's better to get guidance early, before starting the conversation.
Want to feel more confident handling HR the right way?
Redundancy is one of the most common things we help our clients with. If it’s something your business really needs to do, we’re here to make the process easier and give you confidence along the way. Chat to us at Dakota Blue Consulting, we’ll help you get it right.