Proposing redundancies

This page sets out the steps to take if you’re planning to make less than 20 employees redundant.

If you’re planning 20 or more redundancies, you’ll need to run a collective consultation. Acas has more guidance on collective consultations.

Acas also has step-by-step guidance on what to do if you need to transfer employees to a new employer. This is sometimes called a Transfer of Undertakings (Protection of Employment) or TUPE.

Redundancy is a form of dismissal. You may need to consider redundancies if you:

• can no longer afford to employ one or more members of staff
• decide to restructure your organisation, and no longer need some roles.

Where possible, you should try to avoid or minimise the need for redundancies in the first place. This could involve:

• restricting overtime
• reducing the use of temporary employees
• reorganising work rather than recruiting additional employees.

If you’ve tried the above and still need to make redundancies, by law you must:

• select who is at risk of redundancy fairly
• consult with those at risk of redundancy
• identify and offer suitable alternative employment, where available
• give statutory redundancy pay to employees who are made redundant and have two years’ service or more, including staff on fixed-term contracts.

We explain each of these steps in more detail below.

Selection for redundancy

First, you’ll need to decide which employees you propose making redundant.

In some cases, this will be clear – for example, if there’s only one employee doing a role you no longer need. But if there are two or more employees doing the same role and you only need one, you’ll need to select between them, using fair and objective criteria. Examples of such criteria include:

• standard of work or performance
• skills, qualifications or experience
• attendance records that are accurate and do not include leave for pregnancy, disability or maternity
• disciplinary record.

You shouldn’t select people based on their:

• length of service
• part-time status
• age
• pregnancy
• maternity, paternity, adoption or shared parental leave.

Acas provides more detailed guidance on selecting employees for redundancy.

You could also read Acas’s guide on managing redundancy for pregnant employees or those on maternity leave.

Consultation

Once you’ve made your selection, you’ll need to inform and consult with those at risk.

Acas provides a series of free, downloadable templates that you can use to tell employees that they're:

• at risk of redundancy
• invited to a consultation meeting.

Download Acas’s free redundancy templates.

You should allow at least two weeks for the consultation process. Begin the consultation period by setting out your proposals in writing.

Your proposals should:

• clearly set out which employees are at risk of redundancy and why
• let employees know how they can respond.

During the consultation period, you should:

• meet with affected employees to hear their views on the proposed changes
• carefully consider any points your employees raise – can you avoid or minimise redundancies?

Notice of redundancy

At the end of the consultation period, you’ll either confirm your plans, or amend them based on the comments you received.

If you’re still proposing to issue a notice of redundancy to an employee, you should take the following steps.

Step 1: Invite employee to a meeting

Send a letter to the employee, stating that you’re proposing to make them redundant and explaining why. In this letter, you should invite the employee to a meeting to discuss the matter.

Step 2: Hold notice of redundancy meeting

Arrange the meeting, giving the employee the opportunity to be accompanied by a work colleague or certified trade union official. Give the employee the opportunity to express any final views about how redundancy could be avoided, or the impact on them minimised.

Step 3: Consider final feedback

After the meeting, carefully consider any points the employee raised.

Step 4: Issue notice of redundancy

Having considered all the information, inform the employee in writing about your decision. If you decide to issue notice of redundancy, this notice should indicate the employee’s last day of service with you. The employee is entitled to the notice period in their contract of employment, or the statutory notice period, whichever is higher. You should also let the employee know they can appeal against the decision.

Download Acas’s free template letter confirming an employee has been selected for redundancy.

Step 5: Hold appeal meeting

If the employee appeals against their selection for redundancy, hold an appeal meeting. The employee has the right to be accompanied at the meeting.

Where possible, the appeal should be held by a manager or trustee who hasn’t been previously involved. They should consider whether the employee has been fairly selected for redundancy.

Step 6: Continue to consult

Continue to consult with the person selected about ways of avoiding the redundancy, and ways of minimising the hardship on them, during the redundancy notice period.

Suitable alternative employment

If there’s alternative employment available, discuss it with the employee. This could be a suitable ‘like-for-like’ alternative, or a different type of work.

If you can offer alternative employment, you’ll need to put the offer in writing, showing how the new employment differs from the old. You should make the offer before the employment under the previous contract ends. By law, the new job should start within four weeks of the old job ending.

The employee has the right to a four-week trial period in the new job. If the trial period doesn’t work out for either employee or employer, the employee normally retains the right to a redundancy payment.

Redundancy payments

As a minimum, you must pay statutory redundancy pay. Employees with two years’ service or more are entitled to this.

If your employee’s contract of employment states a higher redundancy pay entitlement than statutory levels, you should pay that instead. You should set out in writing how you’ve calculated the redundancy payment.

Remember, you’ll also need to make payments for any annual leave accrued but not taken. If you don’t want the employee to work their notice, you’ll also need to pay in lieu of notice.

GOV.UK provides a redundancy pay calculator.

Support the employee as much as you can. This includes giving them reasonable time off to find a new role, or to arrange training for their new role. Employees are legally entitled to this if they’ve worked for your organisation for at least two years.

Consider how you’ll keep relevant matters confidential. Ask the employee how they’d like you to inform staff about their last day.

Think about how you might recognise the employee’s service. For example, a leaving card or gift might be appropriate.

Now you’ve read this page, it’s a good idea to seek advice from a human resources specialist.