How to make an employee redundant: 5 strategic steps

Making employees redundant can be a stressful situation for all involved. While it’s a daunting prospect, a well-executed redundancy plan can make all the difference and decides whether employees feel totally valued or completely cut off without any thought to their ongoing needs. As a legally sensitive process, it’s got to be executed with true consideration for the law and the affected employees.

Done the right way, the redundancy process can protect your organisation from unfair dismissal claims and preserve your brand. Done the wrong way, and it can lead to expensive tribunal cases, damage your reputation, and create disengagement among remaining employees.

To help you fully understand the legal process around how to make an employee redundant, Careerminds is on hand with 10 structured and legally compliant steps, so you can ensure that any planned redundancies go as smoothly as possible.

When learning how to make an employee redundant, it’s vital to meet one of the legally required criteria under UK law. Genuine reasons include the closure of the business, the closure of the workplace where the affected employees work, or the lack of requirement for certain workers to carry out their role. 

You can’t make someone redundant in the UK for poor performance or in place of taking disciplinary action. If their role is ongoing, and you just want to replace them with someone else, this is grounds for unfair dismissal.

If there is a redundancy situation due to a business transfer or takeover, TUPE may apply. This stands for the Transfer of Undertakings (Protection of Employment) Regulation, and is seen as automatically unfair unless there is an economic, technical, or organisational (ETO) reason.

Before going any further, employers must be at pains to show that they’ve demonstrated all the ways they can to avoid redundancies, otherwise unfair dismissal claims could be going their way.

This includes:

• Redeploying into suitable alternative roles.
• Reducing hours or job sharing.
• Laying workers off temporarily or offering sabbaticals.
• Enacting hiring freezes.
• Offering suitable employees an early retirement package.
• Cutting back on using freelancers or casual labour.

The Advisory, Conciliation and Arbitration Service (Acas) makes it clear that making redundancies should always be the last resort.

If you’re proposing to make 20 or more redundancies within 90 days at one establishment, you must adhere to the collective consultation rules. Failure to comply could result in a protective award of up to 90 days’ pay per affected employee.

The rules are:

• Consulting the employee representatives, which will be an elected representative or the relevant trade union.
• The minimum consultation periods are at least 30 days for between 20 and 99 redundancies, and at least 45 days for 100+ redundancies.
• Submit an HR1 form to the government or an advanced notification of redundancies.

Once redundancies are on the cards, affected employees should receive a formal “at risk of redundancy” letter, outlining the reason for the redundancy, the roles which are affected, the consultation process, the timeline, and next steps. This is the formal start of the consultation, but not the decision itself.

Communication is always key in these scenarios. Being open and honest, with a clear communication strategy is important. It’s a necessary part of the process that will be useful for your management team when delivering the news. Consulting individually with affected employees means explaining the business rationale, discussing the selection criteria, exploring alternatives, and allowing employees to challenge assumptions. 

Acas emphasises that a redundancy consultation UK must be genuine, and no decisions should be reached before the consultation ends.

Follow this advice:

• The main piece of information that departing employees will want to know is why. Don’t use a personal reason, give a business-related reason only.
• Choose your words carefully. Don’t go down the road of using terms like “trimming the fat” or “getting rid of dead wood.” That’s offensive and isn’t acceptable.
• Write a script to help you and other managers stay on track during the consultations.
• Make sure the plan contains any email communication you intend to send.
• Stick to talking to employees in person (or via video, depending on how your company operates).

Where a cohort of employees is affected, selection must be objective, consistent, and non-discriminatory. Avoid discrimination under the Equality Act 2010, which protects characteristics such as age, disability, maternity, race, religion, and sexual orientation.

Common criteria for redundancy include:

• Skills, qualifications, and experience.
• Performance based on documented evidence and attendance records, adjusted for disabilities and pregnancies.

Before compiling a list of criteria, consider offering voluntary severance packages. There are several benefits to this, as voluntary redundancies have multiple advantages over involuntary ones. Employees who leave voluntarily are less likely to sue the organisation and are more likely to sign their release in exchange for severance and outplacement services, if offered.

After the consultation finishes, invite employees to a formal outcome meeting where you can confirm the redundancy decision, explain how the selection criteria were applied, outline redundancy pay and notice, and provide the right to appeal.

• Prepare a script for the meeting, but don’t read it out loud like a robot. Just have it to hand should you need to refer to it.
• Get straight to the point. If the employee raises any questions, answer them as best you can but don’t stray off topic. Refer them to HR for further information.
• Remember that surviving employees might be edgy, so reiterate to them that their positions are safe. However, don’t say this if there’s a chance you might have to make additional cuts in the near future.
• Improve morale for remaining staff during redundancies by showing them that those who are let go are fully taken care of with packages that include outplacement support.

The meeting should then be followed up with a formal redundancy letter.

Employees who hold over 2 years of continuous service are entitled to statutory redundancy pay, calculated using these three criteria:

• The employee’s age.
• Their length of service, up to 20 years.
• Their weekly pay, capped by the government.

Follow the simple breakdown below to calculate pay when deciding how to make an employee redundant.

Work through the employee’s service year by year, using the following rules:

• For each full year worked under the age of 22, multiply by 0.5 week’s pay.
• For each full year worked aged 22 to 40, multiply by 1 week’s pay.
• For each full year worked aged 41 and over, multiply by 1.5 weeks’ pay.

Then add all of those amounts together to get the total redundancy payment.

Let’s use an example for clarity.

Moira is 45 and has 10 years of service, earning £600 per week.

• The 5 years she was aged between 35 and 40 is 5 × 1 week = 5 weeks.
• The 5 years she was aged between 41 and 45 is 5 × 1.5 weeks = 7.5 weeks.

Total = 12.5 weeks’ pay.

12.5 × £600 = £7,500 of statutory redundancy pay.

It’s important to note that in the UK:

• Weekly pay is currently capped at £700.
• A maximum length of service is counted up to 20 years.

This can be presented as a simple table:

Age band	Years worked	Multiplier	Weeks’ pay
22 – 40	5	1	5
41+	5	1.5	7.5
Total			12.5

Enhanced redundancy packages are normally offered to those in leadership and other senior roles, and should be customised to suit each recipient.

While not a legal requirement, offering an appeal is considered best practice which aligns with Acas guidance. It allows employees to challenge the selection criteria, raise any procedural concerns, and provide additional evidence as to why they should not be made redundant. Offering this as a process can significantly reduce the risk of tribunals.

This can come in the form of counselling, extra face-to-face meetings, and help with financial advice.

If employees have worked for you for over 2 years, you must allow them time off to either look for new jobs or sort out training to gain crucial in-demand skills. They should be paid for this time off, which is limited to 40% of a week’s pay. For example, if a worker, who’s paid £500 a week, takes 2 days off to find a new job, they must be paid £200 for those 2 days. The main thing to remember here is to be consistent in your approach to all affected workers.

Businesses aren’t legally obliged to provide outplacement to departing employees, but this type of support is increasingly viewed as a risk management and employer brand tool, not just an extra benefit. Research consistently shows that structured career transition support can reduce the time to re-employment and improves morale among remaining employees.

Careerminds offers extensive outplacement services that cover all requirements where displaced employees are concerned. For senior leaders, our executive outplacement service is tailored to each individual, enabling fast and successful career transitions. 

Even well-intentioned organisations can get this wrong, with the most common pitfalls including:

An employee with poor performance or misconduct cannot be made redundant. For these reasons, a company should follow the termination route to fire them. Using performance management for redundancy purposes is likely to result in unfair dismissal claims.

Consultations are not optional, but a vital part of the UK’s redundancy process. They must be meaningful, and not tagged on as an afterthought.

This is particularly risky under the Equality Act 2010 and can lead to discrimination tribunals.

Any glaring errors can lead to legal disputes and financial penalties for your organisation, so check and double check any calculations before formalising them.

If you have used the redundancy process to get rid of someone, so you can employ someone else in the same role, this is a misuse of the process. It undermines the legitimacy of the redundancy and will be challenged. Unless there’s a solid reason for doing so, such as winning a new contract, a tribunal will likely rule in favour of the employee wrongly made redundant.

A. Both redundancies and dismissals are reasons for ending an employee’s contract, but they arise from different legal contexts. Redundancy is where a role is no longer required, often because of a workforce reduction or a company restructure, but ii has nothing to do with the employee themselves. Other dismissals relate to misconduct, poor performance, or long-term illness, if it means the employee can’t do their job effectively.

A. A fair process includes establishing a genuine redundancy, consulting employees, applying fair selection criteria, giving notice, and providing redundancy pay.

A. Employees with at least 2 years of continuous service and those with employee status qualify – this doesn’t include self-employed contractors. Employees can claim redundancy payments and anything else owed to them via the redundancy payments service.

A. You may face unfair dismissal claims, discrimination claims, or protective awards, if employees have been made redundant without proper notice or consultation by their employer.

A. This isn’t legally required in the UK, but is strongly recommended under Acas best practice. 

If your redundancy process was scrutinised by a tribunal tomorrow, would it demonstrate fairness or just intent?

If your organisation is going through a redundancy event, you’ll want support and outplacement services

in place for departing employees. Get in touch with us at Careerminds to discover how we can help.