Over the last few years, the UK has faced significant economic challenges. In 2023, the number of planned redundancies increased by 58% compared to 2022. Whatever your political views, the impending election promises to make a number of changes to employment law that may require changes in business structure to accommodate these.
All businesses face periods of uncertainty or downturns, and when cash flow becomes tight, you might need to make some employees redundant. The redundancy process is also often used when a company grows and roles are changed, with new ones added and old ones removed, and also when companies relocate.
When making redundancies, it’s essential to follow the correct process. Otherwise, you could be left liable to claims of unfair dismissal, which can be costly for your business. When followed correctly, the redundancy process ensures that everyone involved understands what’s happening, how long it will take and what options are available.
In this blog, we’ll explore the timeline and procedures involved in redundancy so that you can follow a lawful process.
Redundancy timeline: How long does it take?
The length of time the redundancy process takes will depend on how many people you’re making redundant and the type of consultation for redundancy you’ll need to carry out. Usually, the more employees you make redundant, the longer the consultation period will last.
If you’re only making one employee redundant, the process can take as little as two weeks. However, if you’re making multiple redundancies, it can take much longer. Below are the expected timings or legal requirements for different numbers of employees.
The consultation process for redundancy and the number of consultation meetings you will need to carry out will vary depending on your business and a range of factors.
Here are the redundancy consultation requirements for the UK:
- 20 employees or less – The process takes less than 30 days (it’s essential to consult with employees on an individual basis) or must take place ‘within a reasonable time’.
- Between 20 and 99 employees – The process must last at least 30 days before you make your first dismissal (you need to complete individual and collective consultation).
- 100 or more employees – You must carry out a collective consultation process that must last at least 45 days before you make your first dismissal.
Following the redundancy process
Redundancy is usually a type of dismissal used when a role no longer exists or is no longer required within a business. Redundancy results in termination of the employee’s employment, so it should only be used once other options have been exhausted.
If you’re making employees redundant, you must follow a legal process to ensure you meet employees’ rights whilst protecting yourself from the risks associated with dismissal, such as tribunal claims.
The redundancy process must follow a list of steps to ensure you act legally. Here are the steps you should follow. We call it having a strong business case:
Step one: Establish your reasons for redundancy
Before you can make anyone redundant, you need to explain the reasons for making cuts to your workforce. It’s essential that you have genuine and legal reasons for making your employees redundant. Think about the situation that’s led to proposed redundancies, the number of employees who will be affected and the alternatives you might be able to offer. Make sure your proposal is as clear as possible because you might need it in a tribunal if an employee tries to claim unfair dismissal.
Step two: Create a redundancy selection pool
This is for the roles that are at risk of redundancy. It doesn’t matter how many people you’re making redundant, you need to make sure you select them fairly and have a selection process to follow.
The pool of people will be made up of employees who undertake a similar type of role within your business. This is the group of people that you will select individuals to be made redundant from. You might only have one person in a particular role, so you’ll only have a pool of one. Deciding on a selection pool can sometimes be a challenge, especially when there are roles that are similar across the organization. It is important to consult employees on the selection pool if applicable in the consultation process.
Step three: Consider alternatives to redundancy
You should always explore any alternatives to redundancy before making a decision on which employees to make redundant. This could lead to a decrease in the number of redundancies you need to make or even mean you can avoid redundancies altogether. These could include early retirement, lay-offs, lowering working hours or removing overtime, or providing a pay reduction.
You will need to discuss all options with your employees and be open to any new ideas they suggest.
Step four: Inform the employees who are at risk of redundancy
You’ll need to speak to the employees who are at risk of redundancy to explain the situation to them and provide them with an official letter. They will need to be informed that you are starting a formal consultation period.
At this stage, you can also ask for voluntary redundancy in which you provide employees with a severance package for leaving your business. This is usually more than the compulsory redundancy package to make it more attractive.
Step five: Hold consultation meetings
Lastly, you’ll need to hold meaningful consultation meetings with your employees. If you have more than one employee in the pool, you’ll need to hold a minimum of three meetings and identify a fair selection criteria to identify those who are going to be made redundant.
For individual redundancies, you’ll only need to hold one or two meetings.
Is a consultation period required for redundancy? Why do you need to follow a redundancy process?
The redundancy procedure is a legal requirement and proves that you’ve done everything you can to avoid making your employees redundant.
Not only does it show your employees you’re following the correct steps, but it also helps to mitigate the risk of successful employment tribunal claims if an employee believes they have been dismissed unfairly.
To avoid unfair dismissal or other claims, you will need to prove that you have made redundancies for fair reasons, that you dismissed individuals in a fair way and that you acted reasonably when making the decision to dismiss a particular employee.
HR Consulting services by Trusted HR
If you need to make staff redundant or you’d like advice on other aspects of your business, our HR consultants are here to help. Trusted HR offers email, telephone, video call, or on-site support to help ensure you follow the correct dismissal procedures and protect your business.
Our team members are fully qualified up to CIPD Level 7 and are highly experienced. They can help you reduce the risk of dismissing an employee, especially if it’s a complex issue or you require legal advice. In addition to our ad hoc HR consultancy, we also offer three levels of retainer HR support if you require ongoing guidance and advice.
Trusted HR offers a free, 45-minute, no-obligation consultation on any HR issue, including dismissals. Request your consultation to get started.
