Redundancy letter

Nobody likes writing or receiving redundancy letters. Yet they are useful for recapping facts when a staff member is too upset to listen to what you are saying, says Sue Tumelty

Nobody enjoys having to write a redundancy letter – it’s a painful process for management and employees. Using a proper and correct consultation process can help take the emotion out of the situation, with the added benefit of minimising the risk of unfair dismissal tribunals at a later stage.

Many businesses having changed significantly during the pandemic and, with cultural changes ongoing, many companies are looking at adapting their workforces to meet future challenges.

It’s important to state that having a considered business case for redundancy is key to making this a smooth process for everyone involved.

As an employer you should have made efforts to minimise the need for redundancy and be able to demonstrate these.

However if job losses are necessary, there is a set procedure for written communications which you should follow.

>See also: Re-employing staff after Covid

Types of redundancy letter

There are three main types of redundancy letter, one for each stage of the redundancy process. You may write more than three, for example if you have a multi-stage consultation process, but three is likely to be the minimum. They are:

  1. The Business Case and At-Risk letter
  2. Consultation Meeting letter
  3. Confirmation of Redundancy letter

Throughout this process, you should remember that most employees are only thinking about how this affects them – their mortgage, bills, their holiday. So they’re unlikely to take in everything you may communication verbally, which is why something in writing can be useful.

Be sensitive, too. Redundancy is a difficult time for employees your employees and their families so understand what it means to them, and why it is essential to support them through this.

Laying out the business case for employees at risk

The first thing that the business owner must do is write a business case for the redundancy programme, including steps taken to minimise the need for job losses. These may include freezing recruitment so that you can provide alternative roles for your current staff, or other ways in which the business can save money.

Generally, redundancy situations occur when:

  • The requirements to perform a role have ceased or diminished, or are expected to
  • Through closure of the location in which the work was performed
  • Because of a necessary reduction in business costs
  • If improved technology has replaced work
  • Or for organisational changes like mergers

Once you have identified potentially redundant roles, your approach will differ depending on if you are making a selection from a group of staff performing similar roles, or if you are making a standalone role redundant.

All of this should be laid out in your first letter. At this point you can start the consultation process.

>See also: Statutory maternity pay UK

Recording your consultation process in writing

As mentioned earlier, written communication provides a formal record of your process and also enables staff to digest information which they may miss through purely verbal communication.

So, at each point during your consultation process you should follow up the meeting with a letter.

Your first consultation meeting will explain the reasons behind the redundancy programme and inform staff that there is a risk of redundancy. If over 20 employees are to be selected, then the period of consultation is over 30 days and you must have elected employee representatives.

The consultation process must be genuine and not predetermined. So, the next part of your consultation is about listening – to ideas of how to avoid the redundancies. Again, this is confirmed in writing. If no ideas are forthcoming or if ideas are not workable, then this should be explained.

At this point, with a group of employees you will now decide and mark selection criteria. Employees are entitled to see their own score but not that of colleagues.

Managers usually look at skills, performance, disciplinary records and attendance. With attendance, be careful to leave out any maternity leave and make reasonable adjustment for those with a disability. All markings should be supported by evidence rather than opinions and selection must be fair and based on objective criteria. You must not open yourself to an allegation of discrimination based on any protected characteristics like age, disability, gender, sexuality, religion, race or pregnancy.

Once employees are selected, you should start the search within the company for any suitable alternative employment for them.

Confirming redundancy

Finally, if no roles are available you would write to the employee confirming the date of termination and their pay details – either for the statutory amount or, if you pay enhanced redundancy, their contractual figure.

Statutory Notice pay is one week after the first month, a week’s pay for up to two years of service, then one week per year of service to a maximum of 12 weeks or their contractual notice, whichever is the greater.

Employers should remember to include any holiday pay for accrued but untaken holiday, with notice and holiday pay including elements such as overtime.

Contracts may include arrangements for Payment in Lieu of Notice (PILON), where employees stop working for you straight away.

Again, be aware of the risk of tribunal claim if you dismiss an employee sooner than the end of their notice period.

Of course this is inevitably a brief guiding outline to cover a spectrum of different situations. Throughout a redundancy programme, the onus is on the employer to provide as much information as possible, continuously bearing compliance in mind. Remember that any wrong steps during this process may open you up to an employment tribunal. So, if you’re in doubt about your compliance, do not proceed. Seek professional, expert advice before going ahead.

Sue Tumelty is founder and executive director of The HR Dept

Further reading

Flexible working from day one – what it means for SMEs

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Sue Tumelty

Sue Tumelty is founder and executive director of The HR Dept Ltd.

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